“Recently”?? Have people not seen the findings of the AdTech Antitrust lawsuit they lost? Y’all should google it (heheh) especially the ad auction rigging parts of it, including Project Bernanke.
What they’re doing now is just being a lot more overt about it, because they want to carve up their old cash cow to feed their AI ambitions before ChatGPT and Claude eat it up first.
They can't juice, because advertisers are now good in calculating conversion rate, roas, cpa, etc, so they would shift budgets to other channels like overnight if see Google underperforming.
There's a reason why GSP (Generalized Second Price) auctions are called "truthful auctions", and that's because they elicit the true value as the bid from the advertiser (in theory).
So (in theory) advertisers will lower their bids if they're not getting the desired value from the clicks; and over time some will migrate budgets to other channels (like "influencers"? shudder ...).
I don't think so. First price auctions are not truthful, and advertisers hate them. But there are 50 shades of gray between a second price auction and a first price auction.... if you get my drift.
Of course the big spenders on Google with the multi-million dollars advertising budgets won't just change their spending behaviour over night. That takes time - like anything in big corporations.
Sort of. It really does depend on the company and how they're set up. Like, brands using agencies or more non DR advertising only update on marketing mix models which are much slower.
what channel actually provides most of these ad buys that would satisfy their ad dollars?
Google has been sued for being a monopoly, and it's not because they're just really good. It's because there's basically no other market that hits any of the dollar costs.
Ad tech started it's migration to first party auctions before 2020 including Google. This is old news in ad tech. Not sure about the correlations the X poster is making.
I (and a non trivial number of people I knok) have switched to Kagi for search just to avoid having to deal with the bullshit that is the above the fold google search results.
Course, they win anyway because I also pay for youtube premium to avoid seeing ads..
Feels like the world is becoming a split between people who can afford not to be the product and people who cannot.
People take the ad supported internet for granted, and genuinely believe that if we could just put companies in their place, we could have an ad-free internet that is totally free to use.
Wow, that X post is the most succinct but persuasive and damning thing I've read about Google's ad business developments in years (I don't watch it particularly closely.) Thanks!
Don't take it at face value. There is a serious rebuttal but I cannot find it now (post is from previous quarter). Anyway, he's twisting facts to fit the narrative.
Fascinating read, thanks! The counterpoint to "slaughtering the golden goose" is: If you're all in with AI, this is the rational thing to do, no?
If AI takes over, search becomes irrelevant, so better extract as much value from search as possible while it's decaying and not dead yet.
Gotta love seeing the complaint calling out "exact match (close variant)". Google sure does love text embeddings because it massively increases the keyword-search matches for auctions. After all these years, they definitely have no intention of fixing it for the advertisers.
> Search volumes are declining as legacy search is being increasingly cannibalized by non-monetized LLM queries
Second sentence is empirically a complete lie.
Search volume is still growing, despite analysts asking on every call what Google is going to do about falling volume, and Google continuing to re-iterate: Search volume is still growing, as are clicks on ads.
I get it that everyone hates paying as much for clicks as they do now. You can hate it all you want. You can claim Google is lying about search volume and ads, but that would be massive securities fraud...
Haters gonna hate. It doesn't mean the king is dead.
Random anecdotes like this don't equate to "company juicing their numbers". You need much stronger evidence than that to make such an assertion. There are legal and financial ramifications for lying, companies are audited, there are official forms and documents that public companies must file. Of course a company can lie on those forms, but in the case of a company like Google you need extraordinary, factual evidence to make claims like "they've been juicing their numbers".
You basically have to say, everyone from the CEO/CFO, to the auditors, the financial analysts, the legal team, and all the way down are all lying and this random guy on Twitter is telling the truth. Sorry, not buying it.
See the replies to that tweet. I agree, one swallow does not a spring make; but here there's a pattern. Ask anybody who does search advertising, and you'll hear the same story too many times for it to just be a coincidence.
Most people don't know this, but the Search Advertising auction is a black box. The advertiser just specifies a bid (the maximum they're willing to pay for a click); and the search engine promises that they will not pay more than that.
Here's a trick that Search Engines may (or may not, I plead the Fifth) use: the price an advertiser "i" who bid "bid_i" pays is bid_(i+1) * pctr_(i+1) / pctr_i where "pctr_(i+1)" is the predicted probability of click (pCTR) on the next lower ad; "pctr_i" is the predicted probability of click on the current ad.
Guess who calculates the pCTR? The Engine! In theory, if their pCTR calculations were 100% accurate, all advertisers would pay the minimum bid (which is typically $0.01)! Clearly, this is not desirable. So Engines juice the revenue by tweaking these pCTR values. Talk to anybody who works on auction mechanisms at a search engine, and you'll hear stories of how they tweaked these pCTR values.
In this context it's being used as tantamount to lying. "Juicing the numbers" implies that something is being misrepresented which is a form of lying.
Yes I read the post (please refer to HN guidelines on asking if people read something) and didn't find anything worthwhile there which is why I mentioned what I did.
Posting here for others asking about lying/juicing since I'm rate limited.
~~~~~
Lying on financial statements is in fact illegal. Juicing implies that some number is being misrepresented as higher than it otherwise would be which is a form of lying and thus would be illegal.
Obviously there are some gray areas - "we changed how we measure this" or something along those lines can be considered "juicing" or just a matter of changing a calculation to make more sense, but the broad accusation is extraordinary and requires much more evidence than some random person on Twitter saying some things. As an investor in Google (individually and through ETFs) it has no bearing on any investment thesis I have because I don't care what random nobodies on the Internet say and neither should you.
Their earnings missed by almost 30%, which is pretty huge in the stock market.
I think the bigger concern is that earnings misses are very rare for GOOG, and historically they've been able to hit almost any target that Wall Street expects. Their past earnings misses were all related to major macroeconomic events (2020Q1, which was the COVID shutdowns, 2022 all year with inflation from COVID/Ukraine + rate hikes, and 2019Q3 with the taper tantrum from Fed rate hikes), and most of them were more in the 5% range. A 30% miss, particularly with slowing revenue growth in their core business despite almost full monetization of commercial queries, could indicate that the golden goose is disintegrating.
For that matter, GOOG has been extremely correlated with macroeconomic indicators since about 2018, which means investors in the rest of the stock market should probably watch out. It's likely we're already in recession but don't know it.
> Their earnings missed by almost 30%, which is pretty huge in the stock market.
It's somewhat fake, as fake as last quarter's huge beat. It's basically due to their large share in SpaceX, which they have to mark to market at the end of the quarter. Anyway, that's not at all the reason for the freakout.
OI isn’t more “actual” than EPS. I remember back when Yahoo traded for less than cash and liquids [1] because investors didn’t trust management not to blow it on stupid shit.
Yes. But framing one as “actual” implies it conveys broad, ground truths better than the other metrics. It does not. The ground-truth metrics would be forward ROA and ROIC.
> The ground-truth metrics would be forward ROA and ROIC.
that's not ground truth in environment when landscape (AI) dramatically changes every quarter, and investments are uncertain bets with huge win potential.
Your ground truth metrics are: 1. How healthy core business: operating income. 2. How aggressively company reinvest: net - operating income.
Its just interesting how wall street views ant and google as the same caliber companies, even google has way more stronger baseline and ant is way more under the water.
They have been juicing their numbers recently .... https://x.com/MaxAnderson/status/2080229375773941871
“Recently”?? Have people not seen the findings of the AdTech Antitrust lawsuit they lost? Y’all should google it (heheh) especially the ad auction rigging parts of it, including Project Bernanke.
What they’re doing now is just being a lot more overt about it, because they want to carve up their old cash cow to feed their AI ambitions before ChatGPT and Claude eat it up first.
I think I'll use the DeepSeek Search API instead and "google it" that way instead
They can't juice, because advertisers are now good in calculating conversion rate, roas, cpa, etc, so they would shift budgets to other channels like overnight if see Google underperforming.
There's a reason why GSP (Generalized Second Price) auctions are called "truthful auctions", and that's because they elicit the true value as the bid from the advertiser (in theory).
So (in theory) advertisers will lower their bids if they're not getting the desired value from the clicks; and over time some will migrate budgets to other channels (like "influencers"? shudder ...).
(Doesn’t change the point of your comment, but doesn’t Google use first-price auctions now?)
I don't think so. First price auctions are not truthful, and advertisers hate them. But there are 50 shades of gray between a second price auction and a first price auction.... if you get my drift.
It's my understanding that Google has been using first-price auctions for a number of years now: https://blog.google/products/adsense/our-move-to-a-first-pri...
Of course the big spenders on Google with the multi-million dollars advertising budgets won't just change their spending behaviour over night. That takes time - like anything in big corporations.
Big spenders already do not bid on google directly, but balance budgets automatically between multiple platforms and channels base on performance
Depends on the big spenders, tbh. Internet native brands are more likely to do this, but larger more staid companies will take a lot longer.
> but larger more staid companies will take a lot longer.
I still believe large spenders already advertise on multiple channels and balance budgets based on performance.
Sort of. It really does depend on the company and how they're set up. Like, brands using agencies or more non DR advertising only update on marketing mix models which are much slower.
what channel actually provides most of these ad buys that would satisfy their ad dollars?
Google has been sued for being a monopoly, and it's not because they're just really good. It's because there's basically no other market that hits any of the dollar costs.
> what channel actually provides most of these ad buys that would satisfy their ad dollars?
advertisers decide which channel justifies.
They still bring 250B ads dollars to google search, meaning it provides more than 250B value to them,
so no.
meta earns lots of money too
What other channels? The alternative on search is Bing and it's a tiny market. Then there's display which is total dog shit.
Ads is highly fragmented market, google has yt, display, mobile ads, there are tons of other platforms (meta, linkedin) where you can advertise.
That first price auction complain is bs, advertisers will just stop bidding $5 for top click and start bidding $1.1 in his example to hit their goals.
Ad tech started it's migration to first party auctions before 2020 including Google. This is old news in ad tech. Not sure about the correlations the X poster is making.
I (and a non trivial number of people I knok) have switched to Kagi for search just to avoid having to deal with the bullshit that is the above the fold google search results.
Course, they win anyway because I also pay for youtube premium to avoid seeing ads..
Feels like the world is becoming a split between people who can afford not to be the product and people who cannot.
People take the ad supported internet for granted, and genuinely believe that if we could just put companies in their place, we could have an ad-free internet that is totally free to use.
We can have that. It would be significantly less toxic too. Meta, X and similar would die.
There would be less monopolies and software industry would consist of smaller competing companies trying to please customers.
ok sounds great. let's hear about this place we have to put all the companies in to make 100% free commerce a reality for everyone.
the real issue, imo, is that we would have to get 90% of consumers to stop relying on advertising to make their purchasing decisions.
Kagi is great!
https://xxcancel.com/MaxAnderson/status/2080229375773941871
Wow, that X post is the most succinct but persuasive and damning thing I've read about Google's ad business developments in years (I don't watch it particularly closely.) Thanks!
Don't take it at face value. There is a serious rebuttal but I cannot find it now (post is from previous quarter). Anyway, he's twisting facts to fit the narrative.
If this is true how is it not fraud or just regular old theft?
Fascinating read, thanks! The counterpoint to "slaughtering the golden goose" is: If you're all in with AI, this is the rational thing to do, no? If AI takes over, search becomes irrelevant, so better extract as much value from search as possible while it's decaying and not dead yet.
You should submit this as its own story. This is big if true, so they say (and based on the replies, it is true).
Gotta love seeing the complaint calling out "exact match (close variant)". Google sure does love text embeddings because it massively increases the keyword-search matches for auctions. After all these years, they definitely have no intention of fixing it for the advertisers.
Advertisers would have pulled out and Google would have lost revenue instead of increasing.
I'm not a believer in Google search long term, but advertisers continue to pay because they still get value - even if Google increases prices.
> Search volumes are declining as legacy search is being increasingly cannibalized by non-monetized LLM queries
Second sentence is empirically a complete lie.
Search volume is still growing, despite analysts asking on every call what Google is going to do about falling volume, and Google continuing to re-iterate: Search volume is still growing, as are clicks on ads.
I get it that everyone hates paying as much for clicks as they do now. You can hate it all you want. You can claim Google is lying about search volume and ads, but that would be massive securities fraud...
Haters gonna hate. It doesn't mean the king is dead.
can confirm; ive started getting advertisements explicitly meant for dentists
im very far from dentistry
Idk if I believe any analysis piece that has a separate paragraph for every sentence.
Random anecdotes like this don't equate to "company juicing their numbers". You need much stronger evidence than that to make such an assertion. There are legal and financial ramifications for lying, companies are audited, there are official forms and documents that public companies must file. Of course a company can lie on those forms, but in the case of a company like Google you need extraordinary, factual evidence to make claims like "they've been juicing their numbers".
You basically have to say, everyone from the CEO/CFO, to the auditors, the financial analysts, the legal team, and all the way down are all lying and this random guy on Twitter is telling the truth. Sorry, not buying it.
See the replies to that tweet. I agree, one swallow does not a spring make; but here there's a pattern. Ask anybody who does search advertising, and you'll hear the same story too many times for it to just be a coincidence.
Most people don't know this, but the Search Advertising auction is a black box. The advertiser just specifies a bid (the maximum they're willing to pay for a click); and the search engine promises that they will not pay more than that.
Here's a trick that Search Engines may (or may not, I plead the Fifth) use: the price an advertiser "i" who bid "bid_i" pays is bid_(i+1) * pctr_(i+1) / pctr_i where "pctr_(i+1)" is the predicted probability of click (pCTR) on the next lower ad; "pctr_i" is the predicted probability of click on the current ad.
Guess who calculates the pCTR? The Engine! In theory, if their pCTR calculations were 100% accurate, all advertisers would pay the minimum bid (which is typically $0.01)! Clearly, this is not desirable. So Engines juice the revenue by tweaking these pCTR values. Talk to anybody who works on auction mechanisms at a search engine, and you'll hear stories of how they tweaked these pCTR values.
> See the replies to that tweet
Social media replies regularly confirm all kinds of nonsense.
I don’t interpret “juicing” to imply illegal.
No one in Google is lying. If what the person in the Twitter post says is true, then everyone at Google is telling the truth, and so is OP.
And given all the replies to that post on Twitter, it sounds like it's true.
Juicing is not the same as lying. Did you read the post?
Some of the things he mentions is worse than lying like not complying to spend caps.
Google doesn't deny it though
Him:
> campaigns we’ve been running for years with $1000 daily budget caps suddenly began spending $2000+ per day
Them:
> How it works: Google can spend up to twice your average daily budget on any single day to capture high-traffic or high-conversion moments.
In this context it's being used as tantamount to lying. "Juicing the numbers" implies that something is being misrepresented which is a form of lying.
Yes I read the post (please refer to HN guidelines on asking if people read something) and didn't find anything worthwhile there which is why I mentioned what I did.
Posting here for others asking about lying/juicing since I'm rate limited.
~~~~~
Lying on financial statements is in fact illegal. Juicing implies that some number is being misrepresented as higher than it otherwise would be which is a form of lying and thus would be illegal.
Obviously there are some gray areas - "we changed how we measure this" or something along those lines can be considered "juicing" or just a matter of changing a calculation to make more sense, but the broad accusation is extraordinary and requires much more evidence than some random person on Twitter saying some things. As an investor in Google (individually and through ETFs) it has no bearing on any investment thesis I have because I don't care what random nobodies on the Internet say and neither should you.
While not negative, it seems that their total revenue and EPS was still lower than forecast, hence GOOG stock being down 15% today.
Their earnings missed by almost 30%, which is pretty huge in the stock market.
I think the bigger concern is that earnings misses are very rare for GOOG, and historically they've been able to hit almost any target that Wall Street expects. Their past earnings misses were all related to major macroeconomic events (2020Q1, which was the COVID shutdowns, 2022 all year with inflation from COVID/Ukraine + rate hikes, and 2019Q3 with the taper tantrum from Fed rate hikes), and most of them were more in the 5% range. A 30% miss, particularly with slowing revenue growth in their core business despite almost full monetization of commercial queries, could indicate that the golden goose is disintegrating.
For that matter, GOOG has been extremely correlated with macroeconomic indicators since about 2018, which means investors in the rest of the stock market should probably watch out. It's likely we're already in recession but don't know it.
> Their earnings missed by almost 30%, which is pretty huge in the stock market.
It's somewhat fake, as fake as last quarter's huge beat. It's basically due to their large share in SpaceX, which they have to mark to market at the end of the quarter. Anyway, that's not at all the reason for the freakout.
> Their earnings missed by almost 30%
which exactly earning number missed by 30%?..
Earnings per share. Analyst expectations were for $3.01 and it came in at $2.12.
Ok, this one happened because they invested into AI hardware build out. Actual operating income grew 30%+ q/q.
> Actual operating income grew 30%+ q/q
OI isn’t more “actual” than EPS. I remember back when Yahoo traded for less than cash and liquids [1] because investors didn’t trust management not to blow it on stupid shit.
[1] https://www.nytimes.com/2015/12/10/business/dealbook/how-to-...
google still highly profitable, so operation income indicates how healthy is business, and eps/net income indicates how agressively they reinvesting.
Yes. But framing one as “actual” implies it conveys broad, ground truths better than the other metrics. It does not. The ground-truth metrics would be forward ROA and ROIC.
> The ground-truth metrics would be forward ROA and ROIC.
that's not ground truth in environment when landscape (AI) dramatically changes every quarter, and investments are uncertain bets with huge win potential.
Your ground truth metrics are: 1. How healthy core business: operating income. 2. How aggressively company reinvest: net - operating income.
That was already forecasted, but not that they were going so cash flow negative.
Its just interesting how wall street views ant and google as the same caliber companies, even google has way more stronger baseline and ant is way more under the water.
So replacing actual organic search results with hallucinating AI summaries reduced profitability? Oh no!
More like ChatGPT and AI is disrupting the search market.
Is the reduced profitability in the room with us now?
Yes, by definition, they literally posted a loss this quarter.
The loss is because they are building data centers for AI. Profitability of search is up.