With great power comes great competition — or so Alphabet CEO Sundar Pichai argued half-convincingly on Tuesday.
In an interview at Vox Media’s Code Conference, the head of Google and YouTube makes the case that its iconic brands are already facing tough challenges from established rivals and aspiring upstarts. The comments came as Google faces multiple investigations and lawsuits, each alleging the Alphabet unit used anti-competitive practices to build and maintain market share in various technology sectors.
“The problem with being in tech is that the competition comes out of nowhere,” Pichai said. “None of us were talking about TikTok three years ago, so I think you have to be open-minded.” He cited classic rivals in Google’s core business, such as Amazon, Microsoft, Apple and Facebook, as well as upstarts like TikTok, which is putting pressure on Google’s YouTube video business. He even cited Chinese competitors, such as Tencent and Alibaba.
Pichai’s assertion reveals a strategic framing of Alphabet’s relationship with the competition that does not differentiate between external threats and internal practices. In doing so, Pichai does little to reassure Alphabet shareholders that he will easily fend off antitrust regulators surrounding the company.
While it’s a bit unfair to extrapolate Pichai’s full thoughts on the competition from a two-minute snippet during an interview, it’s telling that the Alphabet frontman chose to focus on the number of opponents. Citing the names of several tech mammoths and the fastest-growing app on the market, Pichai hints that Alphabet’s business faces more than enough competition.
And in some ways, Pichai is right.
While Google remains by far the leader in ad revenue, generating $34 billion more than Meta, Amazon and Microsoft combined in the first half of 2022, some of its tech brethren are very slowly snapping up market share. Amazon and Microsoft both saw ad revenue gains of 20% to 25% in the first six months of the year, while Alphabet saw 16% growth. Apple doesn’t disclose its marketing revenue, but Bloomberg reported last month that the iPhone maker wants more than double its current ad sales total.
There’s also no denying the success of the fast-growing short video app TikTok. Insider information estimates suggest YouTube users in the US spent 13% more time on the app in 2021 compared to 2019, while time spent on TikTok jumped 46% over that period. The rise of TikTok also forced YouTube to develop its own short video feature, YouTube Shorts, which Alphabet was unable to monetize as well as its legacy platform.
Still, antitrust regulators don’t argue that Alphabet faces insufficient competition from deep-pocketed peers. Rather, they’re building cases around Alphabet’s own behavior over the past few years.
When the Justice Department and 11 state attorneys general sued Google in 2020, government officials cited the Alphabet unit’s entry into a “series of exclusionary agreements that collectively lock in key avenues through which users access search engines, and therefore the Internet”. As an example, the DOJ and state prosecutors cited Google’s multi-billion dollar deal to serve as the de facto search engine for the iPhone.
Similarly, regulators in the European Union are check if Google Meta essentially paid to drop efforts to create competing ad technologies and avoid Google’s competitors. If the allegations are proven, the deal would “restrict and distort competition in the already concentrated ad tech market, to the detriment of competing ad serving tech, publishers and ultimately consumers,” it said. EU officials in March.
The Department of Justice is also should sue google later that year amid allegations that the unit is “misusing its role as both broker and auctioneer of digital advertisements to manage its affairs at the expense of its rivals”, The Wall Street Journal reported. Although the lawsuit has not been filed, Alphabet has already proposed to split its advertising business into several companies, the Log reported.
In all three cases, note that the allegations relate to Google foreclosure the competition, not Google missing competition.
It would be naïve to expect Pichai to admit to anticompetitive practices at a conference, especially with ongoing litigation on multiple fronts. At the same time, compiling a list of rivals does little to build trust in the fairness of Google’s practices. This is certainly not enough for domestic and foreign regulators.
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Still the same cost. Apple unveiled its latest range of iPhones Wednesday, launching a basic version and a pro version with an unchanged price compared to the previous iteration. Company executives have largely highlighted the advanced camera and battery life features on the new iPhone 14 models, which will arrive in mid-September. The phones will go on sale at a time when many consumer electronics companies are seeing a slowdown in sales, although Apple reported no significant slippage in the first half. Apple executives have also introduced upgrades to the company’s smartwatch and wireless headphones.
Better luck after next year. A top Samsung the executive warned on Wednesday that a the slowdown in semiconductor sales is expected to continue in 2023, adding to growing concerns about a prolonged recession, The Wall Street Journal reported. Kyung Kye-hyunSamsung’s co-CEO and head of the semiconductor unit, told a press conference that the outlook for chip sales “doesn’t really seem to show clear momentum for much improvement” in 2023. Semiconductor industry executives forecast a tough second half of 2022 amid falling spending on consumer electronics.
A shared decision. A judge ruled Wednesday that Elon Musk may use a whistleblower’s claims on Twitter about major security flaws in his defense against a lawsuit demanding he complete a $44 billion acquisition of the company, Bloomberg reported. However, the judge also denied Musk’s request to delay the start of a trial in the case, which is expected to begin in mid-October. Musk argued that disclosures provided last month by former Twitter security chief Peiter “Mudge” Zatko offer more evidence that the company breached the terms of a takeover deal.
Give up the fight. Industry associations representing many of the largest U.S. telecommunications providers have dropped their legal objections to Maine’s strict internet privacy law, potentially opening the door for other states to pass similar laws, The Associated Press reported Tuesday. The law, first enacted in 2020, requires internet service providers to obtain customer permission before sharing or selling user data collected by the companies. Groups representing internet service providers argued that the mandate violated their First Amendment rights.
FOOD FOR THOUGHT
Very well made in China. Breaking with China – or at least moving to a more open relationship – will be difficult for Apple. The New York Times reported on Tuesday that the iPhone maker’s fledgling efforts to shift manufacturing to other Asian countries would require uprooting deep ties with China, where the company contracts with a vast network of assemblers and component makers to market its products. Sources told the Time that Apple’s latest iPhone, unveiled on Wednesday, relied “more than ever” on Chinese partners. At the same time, Apple is exploring options to shift manufacturing to India, Vietnam and other countries in the region amid deteriorating US-China relations and frustration over the republic’s COVID policies.
The critical work provided by China reflects the country’s progress over the past decade and a new level of involvement of Chinese engineers in the development of iPhones. After the country lured corporations into its factories with legions of cheap workers and unrivaled production capacity, its engineers and suppliers moved up the supply chain to claim a bigger share of the money than corporations. Americans spend to create high-tech gadgets.
The increased responsibilities China has taken on for the iPhone could challenge Apple’s efforts to reduce its reliance on the country, a goal that has taken on added urgency amid growing geopolitical tensions over Taiwan. and simmering concerns in Washington about China’s rise as a tech competitor.
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BEFORE YOU LEAVE
A lesson in cybersecurity. It’s also back to school for hackers. The Associated Press reported on Tuesday that cybercriminals launched an attack on Labor Day weekend on Los Angeles Unified School District, the second largest district in the nation, causing the organization’s computer systems to shut down. Los Angeles Unified becomes the largest district to date affected by hackers, who have increasingly taken control of schools’ online systems and demanded payment in return for relinquishing control. However, the Los Angeles Unified superintendent said the hackers did not demand money from the district and the attack appeared to be limited to business information. There was no cyber snow day either, as classes resumed on Tuesday.