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“Hey Google, are you unstoppable?”

“Hey Google, are you unstoppable?”

Is the search engine’s dominant streak set to last?

Here’s what you need to know this week:

  • Affairs of state: Is Google a dominant as it seems?

State-by-state:

  • Apple’s CEO faced backlash over his payday
  • Microsoft might take metaverse moderation seriously
  • Google’s parent company made another AI breakthrough
  • Amazon is sitting on untapped value
  • Meta’s new global affairs head is suspected in a leak
  • Tencent poured money into metaverse patents

Affairs of state: “Hey Google, are you unstoppable?”

This week, we want to talk about Google. Whereas Meta’s shares are down 36 per cent in 2022, Google’s owner, Alphabet, has hardly been affected. The tech state from Mountain View now trades at a greater premium than its neighbour in Menlo Park. Analysts are uniformly bullish on Google’s immediate prospects. The question is: are they right? 

The short answer is yes. Google is much less reliant on ad-tracking technology than Meta, especially the invasive sort banned by Apple last year. In two years’ time, Google will turn off ad tracking on its own Android phones, putting even more pressure on Facebook’s model.

Google has other advantages. YouTube is growing so fast it’s surpassed Netflix as the world’s biggest streamer by revenue. Google’s cloud division is nipping at the heels of Amazon and Microsoft. Top engineers still want to work at Google. Less so at Meta.

But will Google’s dominance continue? That’s not a given.

This year it faces several antitrust lawsuits – including the shady Jedi Blue case – as well as heightened scrutiny from Congress and the European Commission. It’s more than plausible that the company will have to restructure its ad business as a result. 

Google Search remains the company’s most lucrative unit, making about five times as much as YouTube and dominating 86 per cent of the global search market. It’s still going strong, but there’s a niggle: well-respected internet experts are beginning to question whether it’s as effective as it once was. 

Last week an anonymous commentator called DKB posted a provocative and widely shared story called “Google Search is Dying”. It came weeks after tech investor Daniel Gross wrote a post calling for a “new Google”.

“In 2000, Google got popular because hackers realised it was better than Lycos or Excite,” Gross said. “This effect is happening again. Early adopters aren’t using Google anymore.”  

Here’s the argument against Google Search: 

  • It’s dominated by advertising. Certain types of searches – for recipes or product reviews – are increasingly ad dominated. For basic searches like “hotels” or “buy shoes”, the top half of the page can show only paid-for results or Google’s own properties, like its proprietary hotel booking tool. Most people don’t scroll “below the line”, meaning they interact with content that’s been selected for commercial, rather than informative, reasons. 
  • It’s gameable. SEO manipulation is increasingly common. Hackers know how to “game” Google’s algorithms to get to the top (for instance: this website gamed its way to the top of Google in Norway).
  • It’s not smart enough yet. Predictive tools often “guess” what answer users want – but this doesn’t always work. Google is in the process of implementing MUM (Multitask Unified Model) which the company claims is 1,000 times more powerful than its current natural language processing tool. Despite announcing MUM last year, Google doesn’t currently use it much.

Here are some positives: 

  • People aren’t switching – in huge numbers – to rival search engines. Instead, they’re appending terms to Google searches which link the results to – as they see it – more reliable sources. If you want an iPhone review written by a real, non-sponsored person, for instance, you might search for “iPhone review site:reddit”. 
  • MUM is exciting in the long term. If the tech eventually allows Google to offer users the same advice a human expert might offer, then the future is certainly bright for the search engine.
  • Google’s search team – led by senior vice president Prabhakar Raghavan – is thinking about visual searches. He wants to get to a point where you can take a picture of your hiking boots and ask “Can these be used to hike Mount Fuji”. That’s pretty cool. 

Google isn’t in trouble – yet. Profits are up and analysts are bullish. But the tech state may want to remind itself of a warning given by its founders, Sergey Brin and Larry Page, in 1998: “We expect that advertising funded search engines will be inherently biased towards the advertisers and away from the needs of the consumers,” they wrote. “Advertising income often provides an incentive to provide poor quality search results.”


Apple: Leadership bonus

How valuable can one employee be? On many metrics, Apple’s CEO Tim Cook has knocked it out of the park since taking over from Steve Jobs in 2011. In the last decade he’s steered Apple to a $3-trillion market capitalisation, upped its profit margins, and forged a new corporate identity as the tech company that cares about privacy. So was Institutional Shareholder Services, a shareholder advisory group, right to express “significant concerns” over his $99-million pay and bonus package? Cook’s leadership has undoubtedly been a success. But details of his remuneration still make for uncomfortable reading, especially the $712,488 he received for “personal use of a private jet” in 2021. As the ISS points out, that “significantly exceeds” comparable companies last year.


Microsoft: Metaverse moderation

Could Microsoft be taking the metaverse moderation challenge more seriously than, say, Meta? Last year the Centre for Countering Digital Hate found that VR Chat – the most-widely used app in Meta’s VR ecosystem – is “rife with abuse, harassment, racism and pornographic content”. Microsoft’s kind-of equivalent, AltspaceVR, now requires users to log in using a Microsoft account and has shut down open social spaces where harassment or unwanted attention were prevalent. Over at Meta, its CTO Andrew Bosworth has taken a different view, insisting that moderating how users speak and behave “at any meaningful scale” is practically impossible. 


Google: Ingenious approach

Last June, DeepMind founder Demis Hassabis told Tortoise members that he had some exciting breakthroughs coming up. Now the UK-based AI firm owned by Alphabet has applied its technology to controlling the superheated soup of matter inside a nuclear fusion reactor. Nuclear fusion promises an abundance of far cleaner and safer energy than fossil fuels – but controlling it is hard. It can only be done at temperatures hotter than the centre of the sun. DeepMind’s AI may help suspend super-heated plasma in a magnetic field long enough to extract energy from it. 


Amazon: Untapped value

Apple may be the world’s most valuable company, but Amazon may have more room to grow. Daniel Loeb, the activist investor, whose Third Point LLC holds a lot of Amazon stock, told investors last week that he sees $1 trillion in untapped value at the tech state. Why? Because Amazon is effectively two businesses: its core e-commerce operation and its Amazon Web Services division, which Loeb said had a standalone value of more than $1.5 trillion. If right, Loeb’s observation might be used by regulators as an argument to break Amazon up.


Meta: Best metamate

How far would you go for your best metamate? Mark Zuckerberg recently promoted Sir Nick Clegg, the UK’s former deputy prime minister, from vice president of global affairs to full-blown president of global affairs. The new title supposedly comes with a sizeable pay rise (£15 million a year) and the responsibility of insulating Zuckerberg and Meta from public-policy scandal and government hostility. Does it also come with the expectation that Clegg would receive insider information about upcoming laws that would affect Meta? Government officials fear that the former politician has been passed sensitive details about the Online Safety Bill, information that only senior aides should have been party to.


Tencent: Metaverse committee

In China, the ill-defined concept of the metaverse now has an oversight committee. Tencent, Baidu and Alibaba Group and others have all filed metaverse-related patents for tech like augmented reality, digital environment engines and wearables like headsets; over 10,000 of them in the past year. China’s new Metaverse Industry Committee is a state-backed organisation that is overseeing these innovations, and is expected to take a tough regulatory stance (especially on aspects like cryptocurrency integration).


Thanks for reading,

Alexi Mostrous
@AlexiMostrous

Luke Gbedemah
@LukeGbedemah