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Data Sheet—Why It’s Not So Easy to Squeeze More Money Out of Facebook and Google

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A couple of stories orbiting around the binary star system of digital advertising known as Google and Facebook made a little less sense than usual in this holiday-shortened week.

Both companies have had a bad year, but maybe looking to the stock market we can gauge whose issues run deeper. Google’s stock price is down 2% in 2018, while Facebook’s has lost a more jaw-dropping 25%. Given the carnage, you’d be forgiven for thinking that maybe the gravitational sway they hold over advertising had weakened a bit. (It hasn’t.) But maybe it does explain some of the following wackiness:

  • The EU wants to impose a tax on Google for linking and running brief clips from publishers’ articles. Huzzah! The media business is saved. Sounds sweet, but the problem is that Google News, where the snippets appear, doesn’t carry ads. When Spain imposed a link tax four years ago, Google stopped carrying its news sites and traffic crashed. In Germany, publishers fearful of a repeat opted out of collecting the link tax. As noted yesterday, Google says it may drop news for the whole continent next. That the new tax would simply crush small and upstart publishers, well, that’s another overlooked impact.
  • Tim Cook says Apple’s lucrative deal with Google is justified because Google is the best search engine. The CEO frequently rails against the data collection and monetization practices of his rivals who don’t make their money selling expensive hardware. But Apple collects billions in pure profit from Google for making it the default search option, and Google makes those billions by some of the very practices which Cook is often blasting. Asked by Axios about the seeming contradiction, Cook said “their search engine is the best” and then pointed to some of Apple’s privacy controls that limit web tracking.
  • BuzzFeed CEO Jonah Peretti says the answer to declining growth at his and other new online media sites is consolidation. Why not merge BuzzFeed with Group Nine Media, Refinery29, Vox Media, and Vice Media to create a 21st century, click-happy news juggernaut he mused in a New York Times interview. The idea—tell me if you’ve heard this one before—is to get more money out of Google and Facebook. “If BuzzFeed and five of the other biggest companies were combined into a bigger digital media company, you would probably be able to get paid more money,” Peretti said. Among the problems is that, unlike say Apple and its choke point hold on 1 billion iPhone and iPad users, publishers are easily substituted for one another in the online world. Controlling 1% of the world’s online news traffic isn’t much better than controlling 0.1%.

My binary star reference above was stirred by my own recent folly. I binge-watched the first season of Star Trek: Discovery. Here’s the two-word review: skip it. Hopefully the restorative powers of the Thanksgiving holiday will knock some sense into me—and the rest of tech world.

Aaron Pressman
@ampressman
aaron.pressman@fortune.com

NEWSWORTHY

Déjà vu all over again. Tech stocks crashed hard yet again on Monday. Among the big losers, Square lost 11%, Salesforce was down 9%, and Adobe dropped 8%. For the largest companies, Apple lost 4%, Amazon was down 5%, Google parent Alphabet lost 4%, and Microsoft was off a mere 3%. Bitcoin also dropped below $5,000.

Spin, spin, spin. In a lesser corner of Wall Street, voice software maker Nuance Communications reported revenue rose 14% to $533 million in its fiscal fourth quarter and adjusted earnings per share almost doubled to 38 cents. Both figures were slightly better than analysts expected, but the company also announced it would spin off its automotive business. Its shares dropped 8% in premarket trading on Tuesday.

Left in the dust. While the tech boom in Silicon Valley has boosted the wages of tech workers in the area over the past 20 years, almost every other job in the region has seen its inflation-adjusted pay decline, according to a new study from UC Santa Cruz. “It’s incredible the kind of revenues or wealth that’s generated in this area, and yet it doesn’t work as an economic model for a large majority of the population,” UCSC professor Chris Benner tells the Mercury News.

More is more. A lot of online looky-loos apparently peruse TripAdvisor’s website and never click on any ads or book any travel. The company hopes to address that lost revenue opportunity with a homepage redesign. The site now features more articles and suggestions via a user-customized feed loaded with content from over 1,000 publishing partners.

ON THE MOVE

(Data Sheet is experimenting with a new weekly section covering executive moves of interest in the tech industry. Please let us know if you find it useful.)

After three years overseeing Google’s cloud efforts, Diane Greene is departing to be replaced by former Oracle product head Thomas Kurian. Greene, who co-founded VMware, says she plans to focus on mentoring female startup CEOs with engineering or science backgrounds…Snap vice president of content Nick Bell is leaving the messaging company after almost five years. Bell, who helped build Snap’s Discover section and strike media partnerships, said he would “take some time off to recharge before deciding on my next adventure,” in an email to his coworkers…Zillow Group hired Allen Parker as its new CFO. Parker spent 12 years at Amazon where he was vp of finance for devices, the app store, and Amazon Pay.

FOOD FOR THOUGHT

The tragic pedestrian killing by an Uber self-driving car in March led to an immediate halt to the program and sparked a federal investigation. Business Insider’s Julie Bort has been investigating what was going on inside Uber’s autonomous car effort and has a look behind the scenes based on interviews with current and former employees, emails, meeting notes, and other documents. People working on the self-driving cars felt intense pressure to show progress to convince new Uber CEO Dara Khosrowshahi not to cancel the project, she reports. That may have led to risky decision-making:

At the time of the accident, engineers knew the car’s self-driving software was immature and having trouble recognizing or predicting the paths of a wide variety of objects, including pedestrians, in various circumstances, according to all the employees we talked to.

For instance, the car was poorly equipped for “near-range sensing” so it wasn’t always detecting objects that were within a couple of meters of it, two people confirmed to Business Insider.

“This could have killed a toddler in a parking lot. That was our scenario. That’s the accident that didn’t happen, but could have,” one software developer said.

IN CASE YOU MISSED IT

Israel Lashes Out at Airbnb After the Company Pulls Listings of West Bank Home Rentals By Glenn Fleishman

TransferWise Won’t Buy Into Blockchain Until More Banks Use Ripple By Jen Wieczner

Elon Musk’s Big Falcon Rocket Just Got a New Name: Starship By David Meyer

You Can Now Make Skype Calls On Amazon’s Alexa-Powered Echo Speakers By Jonathan Vanian

Instagram Is Purging Fake Followers From the App By Laura Stampler

Apple Pulled the Tumblr App Without Explanation. Now We Know It Was Due to Child Sex Abuse Photos By David Meyer

HP Spectre Folio Review: Everything You Need to Know About the New Convertible Laptop By Aaron Pressman

BEFORE YOU GO

The big Yankees trade last night—swapping three top minor league prospects for Seattle starting pitcher James Paxton—had me in search of the best online baseball sites for tracking the offseason. Baseball America is always good, though mostly behind a paywall. Other suggestions? Send them in.

This edition of Data Sheet was curated by Aaron Pressman. Find past issues, and sign up for other Fortune newsletters.