Why It’s Not So Easy to Squeeze More Money Out of Facebook and Google
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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 (FB) 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 (AAPL) lucrative deal with Google (GOOGL) 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.