Bing Is Sad Pablo: Thoughts On The Google Trial
Bing Is Sad Pablo: Thoughts On The Google Trial
Google's monopoly trial, PLUS: Shein gets a boost from an ex-SoftBank executive.
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Google In Court
I’ve written a lot about Google over at Seeking Alpha (which you can read here and here) and how I think the company’s downbeat 2022 presented a unique opportunity for investors (the stock is up almost 40% since I first covered it there). 2023, however, has presented fresh challenges for the company in the form of an antitrust suit in which the government alleges the company used bullying and unfair business practices to gain what it calls a monopoly in search.
According to one columnist from the Financial Times, however, things don’t seem to be going all that well for the government (or, at least, the government’s case seems to be far from a slam-dunk).
Pretty much every white-collar corporate fraud involves people emailing things they really shouldn’t be putting into emails, and while there appears to be a few things that Google executives wrote that they’d probably like to take back, it hasn’t been… well, super meaty by almost any standard. A Google executive claimed, for example, in an email that only illicit businesses had the potential to make as much money as Google.
I mean, sure. This isn’t a good look, I’ll grant that, but it really only shows what everyone already knows, that Google’s search business essentially prints money.
Other claims against the company seem to point back in the other direction. Microsoft CEO Satya Nadella’s high-profile testimony against his arch-rival almost felt like an indictment of Microsoft, rather than Google, stating that if people aren’t given an immediate choice between Google or Bing, they’ll never stop using Google.1
Perhaps the most wild self-own from the Microsoft executive relates to how even the most splashy piece of technology in the last 20 years (generative AI in the form of ChatGPT) fails to convert users to Bing. The following comes from some reporting in the WSJ:
In his testimony Monday, Nadella suggested he may have been overly enthusiastic in his earlier comments about ChatGPT’s potential.
“Yeah, I mean, look, that’s called exuberance of someone who has like 3% share, that maybe I’ll have 3.5% share,” Nadella said.
Microsoft’s share of the search market has hardly budged since it added the AI features to Bing, The Wall Street Journal reported in August, citing third-party data. The company disputed the data and called the new Bing a success.
Ouch. I mean, really. Ouch.
One of the main issues of the case rests on the idea that Apple and Google teamed up to make Google the default search engine on the iPhone. Apple claims that, yes, that is the case, but that there was a competition between Google and Microsoft (which Google won), and there does exist an option for users to change the default search engine on the phone. Despite this availability, pretty much no one makes a switch.
The reason for this, in my mind, is fairly obvious—Google’s search product is, well, just better. It also seems somewhat silly to me to allege that consumers are somehow held hostage against their will by Google, since changing a search engine is maybe the lowest-cost, easiest consumer switch on planet earth.
In my view (and I’m not a lawyer, and this isn’t legal advice), the logic of the case can be summed up thusly: Google offers a superior product that has muscled out other search providers. The question of whether or not the company achieved this via bullying or truly anticompetitive means is the question the government must answer.
Who knows—maybe they’ll turn up a new, condemning email? But until then, it doesn’t seem to me as though the bar has been met.
Shein On You Crazy Diamond
Fast-fashion giant Shein2 announced that SoftBank-ex Marcelo Claure will now serve as the company’s Chairmain. The company’s business model is essentially to mass-produce clothes in a manner not seen since the pre-industrial era: make a little bit, and then go back and make more if people want more via subcontractors, rather than pushing a new line or a blend of lines en masse.
This business model, you might guess, has a) the potential to be something of a quality control nightmare, and b) relies on ultra-low cost labor. Sometimes the pursuit of item B leads companies to do… not good things. Like slave or child labor.
Anyway, the DOJ has pressed Shein over its sourcing of materials from Xinjiang, where folks have long suspected that the Chinese government utilizes forced labor. The company denies this, though the optics of sourcing all your business in China when your success depends on finding the lowest cost labor possible is… not great.
Claure, for his part, is thus seeking to expand away from China:
“We’re not saying that we’re replacing China,” Claure said. “We’re saying that we’re finding countries where you can have a competitive advantage by being more local.”
I mean, sure. That’s a wonderful academic exercise. But where are you gonna go? Where can you find cheaper labor while addressing the wild human rights concerns raised by fast fashion as an industry in general?
All of this is Claure’s problem to figure out. If his name sounds familiar, he’s the former SoftBank #2 behind the eminent genius and general cash incinerator known as Masayoshi Son. Claure was tasked to clean up WeWork after the Adam Neumann fiasco, and you can draw your own conclusions as to whether or not he was successful before he grabbed his $97 million severance bag on the way out.
Final Thoughts…
Ruh-roh: jobs came in hot. Small-cap funds are rocking it. Questioning the future of the free market. Cyberattacks are still a thing. Ozempic is shrinking waistlines and the market caps of snack companies. Exxon is (maybe) about to get even bigger. No one won (!) yesterday’s PowerBall. FTX’s co-founder testifies again against SBF.
In a parallel universe where people are given the choice, it’s almost certainly the case that everyone uses Google, also.
Look, I don’t know if it’s pronounced sheen or shine, but the headline was snappy so let’s go with it.