revenues 23 percent that year and—here’s the key part—lower cost to
advertisers by 11 percent.^15 Whether you’re the New York Times or
Clear Channel Outdoor, a competitor lowered its prices 11 percent.
And word is it’s great at what it does and isn’t desperate at all. What if
BMW was able to improve their cars dramatically each year while
lowering prices 11 percent annually? The rest of the auto industry
would have trouble keeping up. And, yes, the rest of the media
industry, sans Facebook, is having trouble keeping up with Google.
Google found $90 billion in the collection plate in 2016 and
commanded $36 billion in cash flow.^16 Several times Congress has
debated an incremental tax on firms in sectors that appear to vastly
outperform the S&P. Yet nobody has ever suggested extra taxes on
Google. In many religious faiths, to not avert one’s eyes from God’s
face is certain death. The same fate would probably befall the career of
any congressman attempting to interfere with Google’s progress.
Similar to other horsemen, Google tends to drive prices down, not
up. Most consumer firms push in the other direction. They spend a lot
of time trying to calculate the maximum price they can charge and
capture all excess consumer value. (Booking a same-day flight? Why,
you must be a business traveler. Please bend over.) Google works
differently, which is why it has grown dramatically year after year after
year. And like the other horsemen, it sucks the profits out of its sector.
The irony is that Google’s victims invited the company in, letting
Google crawl their data. Now Google’s extraordinary market cap is
equal to the next eight biggest media companies combined.^17
Few people can explain how Google works. Or what Alphabet
exactly is. Alphabet incorporated in 2015, and Google is one of its
subsidiaries in addition to Google Ventures, Google X, and Google
Capital.^18 People have an idea about Apple: it builds beautiful objects
around computer chips. People understand Amazon: you buy a bunch
of stuff at a low price, then people (robots) in a big warehouse pick,
pack, and get it to you, fast. Facebook? A network of friends linked to
ads. But few people understand what happens inside a holding
company that happens to “hold” a gigantic search engine.