Beyond Google

At an event organized by Glean.AI in Toronto at Hotel X in November 2023, I had the opportunity to meet some individuals working at Google. Out of genuine concern, I remarked, "I am really worried about you guys." The person chuckled reassuringly and suggested I relax. Indeed, these were still early days for ChatGPT, and the LLM company had yet to incorporate internet search functionality into their menu. However, since then, numerous challenges have surfaced for Google. For instance, Google searches on Safari declined for the first time in its 22-year history—a significant event considering Google itself is only 26 years old.

The "too big to fail" logic applies universally, including to giants like Google. But this isn't about mere survival; it concerns market leadership. Google is no longer at the forefront of innovation. It has ceased to be the disruptive upstart it once was. The second-mover advantage it gained by redefining Yahoo's search model is now firmly relegated to history. Google's stock notably underperformed, trailing by over 70% compared to DoorDash, one of the smallest components of the S&P 500.

I first wrote about this inevitable turning point back in 2011, in an article titled "Researching Google Search." My thesis 14 years ago was straightforward: cataloging the web's information is inherently limited as a business model. Eventually, the Information Age will evolve beyond mere cataloging, shifting focus towards predictive analytics, summarization, and genuine intelligence rather than providing 100,000 search results. Google, despite having ample resources for stock buybacks, now finds itself as the entrenched incumbent. Seventy percent of its revenue still stems from ads (primarily search and YouTube), and the company employs nearly 200,000 people—a heavy burden in the agile era of LLM agents. Google's challenges, in fact, have only just begun.

Historical missteps, such as Yahoo's refusal to acquire Google, highlight a cautionary tale for the trillion-dollar behemoth. Yahoo famously turned down Google's acquisition twice—first in 1998, when founders Larry Page and Sergey Brin offered to sell for just $1 million, and again in 2002, when Yahoo's $3 billion bid fell short of Google's $5 billion demand. What was once a fortunate happenstance for Google may now become its nightmare.

My primary grievance lies in governance: Google's dual-class share structure and the controversial decision by the S&P Index Committee to include both share classes, effectively forcing naïve pension funds into double exposure. Such poor governance undermines small investors and amplifies systemic risks, epitomizing a dangerous blind spot stemming from a "too big to fail" mentality. Google's trajectory—from the initial vision of selling the company for a mere million dollars to the frantic maneuvering for absolute voting control—reflects conflicting visions driven more by profit maximization than impactful innovation.

Moreover, celebrating PageRank as one of the nine algorithms that changed the world is primarily a marketing strategy. PageRank assigns numerical weights to hyperlinked documents, ostensibly measuring their relative importance. This algorithm reinforces the web's preferential attachment dynamics—where already popular pages gain further prominence—fueling the problematic "rich-get-richer" phenomenon. This supposed inevitability is a significant scientific misconception, one to which I dedicate an entire chapter in my upcoming book, "End of Passive - Story of the Hidden Bias."

If innovation's pinnacle merely results in building the world's best by cataloguing news based on popularity, TikTok obsession, YouTube addiction, or content addiction like Facebook, then we have barely progressed beyond the Stone Age. Fortunately for humanity, there are brilliant founders out there, tirelessly hustling to construct the next Google, shaping a new conceptual era.

Bibliography

Alphabet's Underperformance and the Curse of Index Investing https://www.linkedin.com/pulse/alphabets-underperformance-curse-index-investing-alphablockio-zbpwe/?trackingId=5FF9MapN5gXxR4N1%2FpX1CA%3D%3D

Web as a Bow Tie, Teapot, and Cuckoo https://www.linkedin.com/pulse/web-bow-tie-teapot-cuckoo-florina-pal-hbrsc/?trackingId=xF3PP9vDQjKn7j4ak9N3xw%3D%3D

Data Universality, Enrichment, Hootsuite and the Future of AI https://www.linkedin.com/pulse/data-universality-enrichment-hootsuite-future-ai-mukul-pal/

S&P’s Google Paradox https://www.linkedin.com/pulse/sps-google-paradox-mukul-pal-caia/

The Conceptual Age https://www.linkedin.com/pulse/conceptual-age-mukul-pal-caia/

Researching Google Search https://www.business-standard.com/article/markets/researching-google-search-111110200041_1.html