Elastic N.V. Faces a New Search Challenge

September 2, 2024

green-dino_thumb_thumb_thumb_thumb_thumbThis essay is the work of a dumb dinobaby. No smart software required.

Elastic N.V. and Shay Banon are what I call search survivors. Gone are Autonomy (mostly), Delphis, Exalead, Fast Search & Transfer (mostly), Vivisimo, and dozens upon dozens of companies who sought to put an organization’s information at an employee’s fingertips. The marketing lingo of these and other now-defunct enterprise search vendors is surprisingly timely. Once can copy and paste chunks of Autonomy’s white papers into the OpenAI ChatGPT search is coming articles and few would notice that the assertions and even the word choice was more than 40 years old.

Elastic N.V. survived. It rose from a failed search system called Compass. Elastic N.V. recycled the Lucene libraries, released the open source Elasticsearch, and did an IPO. Some people made a lot of money. The question is, “Will that continue?”

I noted the Silicon Angle article “Elastic Shares Plunge 25% on Lower Revenue Projections Amid Slower Customer Commitments.” That write up says:

In its earnings release, Chief Executive Officer Ash Kulkarni started positively, noting that the results in the quarter we solid and outperformed previous guidance, but then comes the catch and the reason why Elastic stock is down so heavily after hours. “We had a slower start to the year with the volume of customer commitments impacted by segmentation changes that we made at the beginning of the year, which are taking longer than expected to settle,” Kulkarni wrote. “We have been taking steps to address this, but it will impact our revenue this year.” With that warning, Elastic said that it expects fiscal second-quarter adjusted earnings per share of 37 to 39 cents on revenue of $353 million to $355 million. The earnings per share forecast was ahead of the 34 cents expected by analysts, but revenue fell short of an expected $360.8 million. It was a similar story for Elastic’s full-year outlook, with the company forecasting earnings per share of $1.52 to $1.56 on revenue of $1.436 billion to $1.444 billion. The earnings per share outlook was ahead of an expected $1.42, but like the second quarter outlook, revenue fell short, as analysts had expected $1.478 billion.

Elastic N.V. makes money via service and for-fee extras. I want to point out that the $300 million or so revenue numbers are good. Elastic B.V. has figured out a business model that has not required [a] fiddling the books, [b] finding a buyer as customers complain about problems with the search software, [c] the sources of financing rage about cash burn and lousy revenue, [d] government investigators are poking around for tax and other financial irregularities, [e] the cost of running the software is beyond the reach of the licensee, or [f] the system simply does not search or retrieve what the user wanted or expected.

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Elastic B.V. and its management team may have a challenge to overcome. Thanks, OpenAI, the MSFT Copilot thing crashed today.

So what’s the fix?

A partial answer appears in the Elastic B.V. blog post titled “Elasticsearch Is Open Source, Again.” The company states:

The tl;dr is that we will be adding AGPL as another license option next to ELv2 and SSPL in the coming weeks. We never stopped believing and behaving like an open source community after we changed the license. But being able to use the term Open Source, by using AGPL, an OSI approved license, removes any questions, or fud, people might have.

Without slogging through the confusion between what Elastic B.V. sells, the open source version of Elasticsearch, the dust up with Amazon over its really original approach to search inspired by Elasticsearch, Lucid Imagination’s innovation, and the creaking edifice of A9, Elastic B.V. has released Elasticsearch under an additional open source license. I think that means one can use the software and not pay Elastic B.V. until additional services are needed. In my experience, most enterprise search systems regardless of how they are explained need the “owner” of the system to lend a hand. Contrary to the belief that smart software can do enterprise search right now, there are some hurdles to get over.

Will “going open source again” work?

Let me offer several observations based on my experience with enterprise search and retrieval which reaches back to the days of punch cards and systems which used wooden rods to “pull” cards with a wanted tag (index term):

  1. When an enterprise search system loses revenue momentum, the fix is to acquire companies in an adjacent search space and use that revenue to bolster the sales prospects for upsells.
  2. The company with the downturn gilds the lily and seeks a buyer. One example was the sale of Exalead to Dassault Systèmes which calculated it was more economical to buy a vendor than to keep paying its then current supplier which I think was Autonomy, but I am not sure. Fast Search & Transfer pulled of this type of “exit” as some of the company’s activities were under scrutiny.
  3. The search vendor can pivot from doing “search” and morph into a business intelligence system. (By the way, that did not work for Grok.)
  4. The company disappears. One example is Entopia. Poof. Gone.

I hope Elastic B.V. thrives. I hope the “new” open source play works. Search — whether enterprise or Web variety — is far from a solved problem. People believe they have the answer. Others believe them and license the “new” solution. The reality is that finding information is a difficult challenge. Let’s hope the “downturn” and “negativism” goes away.

Stephen E Arnold, September 2, 2024

The Seattle Syndrome: Definitely Debilitating

August 30, 2024

green-dino_thumb_thumb_thumb_thumbThis essay is the work of a dumb dinobaby. No smart software required.

I think the film “Sleepless in Seattle” included dialog like this:

What do they call it when everything intersects?
The Bermuda Triangle.”

Seattle has Boeing. The company is in the news not just for doors falling off its aircraft. The outfit has stranded two people in earth orbit and has to let Elon Musk bring them back to earth. And Seattle has Amazon, an outfit that stands behind the products it sells. And I have to include Intel Labs, not too far from the University of Washington, which is famous in its own right for many things.

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Two job seekers discuss future opportunities in some of Seattle and environ’s most well-known enterprises. The image of the city seems a bit dark. Thanks, MSFT Copilot. Are you having some dark thoughts about the area, its management talent pool, and its commitment to ethical business activity? That’s a lot of burning cars, but whatever.

Is Seattle a Bermuda Triangle for large companies?

This question invites another; specifically, “Is Microsoft entering Seattle’s Bermuda Triangle?

The giant outfit has entered a deal with the interesting specialized software and consulting company Palantir Technologies Inc. This firm has a history of ups and downs since its founding 21 years ago. Microsoft has committed to smart software from OpenAI and other outfits. Artificial intelligence will be “in” everything from the Azure Cloud to Windows. Despite concerns about privacy, Microsoft wants each Windows user’s machine to keep screenshot of what the user “does” on that computer.

Microsoft seems to be navigating the Seattle Bermuda Triangle quite nicely. No hints of a flash disaster like the sinking of the sailing yacht Bayesian. Who could have predicted that? (That’s a reminder that fancy math does not deliver 1.000000 outputs on a consistent basis.

Back to Seattle. I don’t think failure or extreme stress is due to the water. The weather, maybe? I don’t think it is the city government. It is probably not the multi-faceted start up community nor the distinctive vocal tones of its most high profile podcasters.

Why is Seattle emerging as a Bermuda Triangle for certain firms? What forces are intersecting? My observations are:

  1. Seattle’s business climate is a precursor of broader management issues. I think it is like the pigeons that Greeks examined for clues about their future.
  2. The individuals who works at Boeing-type outfits go along with business processes modified incrementally to ignore issues. The mental orientation of those employed is either malleable or indifferent to downstream issues. For example, Windows update killed printing or some other function. The response strikes me as “meh.”
  3. The management philosophy disconnects from users and focuses on delivering financial results. Those big houses come at a cost. The payoff is personal. The cultural impacts are not on the radar. Hey, those quantum Horse Ridge things make good PR. What about the new desktop processors? Just great.

Net net: I think Seattle is a city playing an important role in defining how businesses operate in 2024 and beyond. I wish I was kidding. But I am bedeviled by reminders of a space craft which issues one-way tickets, software glitches, and products which seem to vary from the online images and reviews. (Maybe it is the water? Bermuda Triangle water?)

Stephen E Arnold, August 30, 2024

Online Sports Gambling: Some Negatives Have Been Identified by Brilliant Researchers

August 29, 2024

green-dino_thumb_thumb_thumb_thumb_tThis essay is the work of a dumb dinobaby. No smart software required.

People love gambling, especially when they’re betting on the results of sports. Online has made sports betting very easy and fun. Unfortunately some people who bet on sports are addicted to the activity. Business Insider reveals the underbelly of online gambling and paints a familiar picture of addiction: “It’s Official: Legalized Sports Betting Is Destroying Young Men’s Financial Futures.” The University of California, Los Angeles shared a working paper about the negative effects of legalized sports gambling:

“…takes a look at what’s happened to consumer financial health in the 38 states that have greenlighted sports betting since the Supreme Court in 2018 struck down a federal law prohibiting it. The findings are, well, rough. The researchers found that the average credit score in states that legalized any form of sports gambling decreased by 0.3% after about four years and that the negative impact was stronger where online sports gambling is allowed, with credit scores dipping in those areas by 1%. They also found an 8% increase in debt-collection amounts and a 28% increase in bankruptcies where online sports betting was given the go-ahead. By their estimation, that translates to about 100,000 extra bankruptcies each year in the states that have legalized sports betting. The number of people who fell dangerously behind on their car loans went up, too. Oddly enough, credit-card delinquencies fell, but the researchers believe that’s because banks wind up lowering credit limits to try to compensate for the rise in risky consumer behavior.”

The researchers discovered that legalized gambling leads to more gambling addictions. They also found if a person lives near a casino or is from a poor region, they’ll more prone to gambling. This isn’t anything new! The paper restates information people have known for centuries about gambling and other addictions: hurts finances, leads to destroyed relationships, job loss, increased in illegal activities, etc.
A good idea is to teach people to restraint. The sports betting Web sites can program limits and even assist their users to manage their money without going bankrupt. It’s better for people to be taught restraint so they can roll the dice one more time.

Stephen E Arnold, August 29, 2024

Google Microtransaction Enabler: Chrome Beefs Up Its Monetization Options

August 29, 2024

green-dino_thumb_thumb_thumb_thumb_t[1]_thumb_thumb_thumb_thumbThis essay is the work of a dumb dinobaby. No smart software required.

For its next trick, Google appears to be channeling rival Amazon. We learn from TechRadar that “Google Is Developing a New Web Monetization Feature for Chrome that Could Really Change the Way We Pay for Things Online.” Will this development distract anyone from the recent monopoly ruling?

Writer Kristina Terech explains how Web Monetization will work for commercial websites:

“In a new support document published on the Google Chrome Platform Status site, Google explains that Web Monetization is a new technology that will enable website owners ‘to receive micro payments from users as they interact with their content.’ Google states its intention is noble, writing that Web Monetization is designed to be a new option for webmasters and publishers to generate revenue in a direct manner that’s not reliant on ads or subscriptions. Google explains that with Web Monetization, users would pay for content while they consume it. It’s also added a new HTML link element for websites to add to their URL address to indicate to the Chrome browser that the website supports Web Monetization. If this is set correctly in the website’s URL, for websites that facilitate users setting up digital wallets on it, when a person visits that website, a new monetization session would be created (for that person) on the site. I’m immediately skeptical about monetizing people’s attention even further than it already is, but Google reassures us that visitors will have control over the whole process, like the choice of sites they want to reward in this way and how much money they want to spend.”

But like so many online “choices,” how many users will pay enough attention to make them? I share Terech’s distaste for attention monetization, but that ship has sailed. The danger here (or advantage, for merchants): Many users will increase their spending by barely noticeable amounts that add up to a hefty chunk in the end. On the other hand, the feature could reduce costly processing charges by eliminating per-payment fees for merchants. Whether end users see those savings, though, depends on whether vendors choose to pass them along.

Cynthia Murrell, August 29, 2024

Eric Schmidt, Truth Teller at Stanford University, Bastion of Ethical Behavior

August 26, 2024

green-dino_thumb_thumb_thumb_thumb_t[1]_thumb_thumbThis essay is the work of a dumb dinobaby. No smart software required.

I spotted some of the quotes in assorted online posts about Eric Schmidt’s talk / interview at Stanford University. I wanted to share a transcript of the remarks. You can find the ASCII transcript on GitHub at this link. For those interested in how Silicon Valley concepts influence one’s view of appropriate behavior, this talk is a gem. Is it at the level of the Confessions of St. Augustine? Well, the content is darned close in my opinion. Students of Google’s decision making past and present may find some guideposts. Aspiring “leadership” type people may well find tips and tricks.

Stephen E Arnold, August 26, 2024

Meta Leadership: Thank you for That Question

August 26, 2024

Who needs the Dark Web when one has Facebook? We learn from The Hill, “Lawmakers Press Meta Over Illicit Drug Advertising Concerns.” Writer Sarah Fortinsky pulls highlights from the open letter a group of House representatives sent directly to Mark Zuckerberg. The rebuke follows a March report from The Wall Street Journal that Meta was under investigation for “facilitating the sale of illicit drugs.” Since that report, the lawmakers lament, Meta has continued to run such ads. We learn:

The Tech Transparency Project recently reported that it found more than 450 advertisements on those platforms that sell pharmaceuticals and other drugs in the last several months. ‘Meta appears to have continued to shirk its social responsibility and defy its own community guidelines. Protecting users online, especially children and teenagers, is one of our top priorities,’ the lawmakers wrote in their letter, which was signed by 19 lawmakers. ‘We are continuously concerned that Meta is not up to the task and this dereliction of duty needs to be addressed,’ they continued. Meta uses artificial intelligence to moderate content, but the Journal reported the company’s tools have not managed to detect the drug advertisements that bypass the system.”

The bipartisan representatives did not shy from accusing Meta of dragging its heels because it profits off these illicit ad campaigns:

“The lawmakers said it was ‘particularly egregious’ that the advertisements were ‘approved and monetized by Meta.’ … The lawmakers noted Meta repeatedly pushes back against their efforts to establish greater data privacy protections for users and makes the argument ‘that we would drastically disrupt this personalization you are providing,’ the lawmakers wrote. ‘If this personalization you are providing is pushing advertisements of illicit drugs to vulnerable Americans, then it is difficult for us to believe that you are not complicit in the trafficking of illicit drugs,’ they added.”

The letter includes a list of questions for Meta. There is a request for data on how many of these ads the company has discovered itself and how many it missed that were discovered by third parties. It also asks about the ad review process, how much money Meta has made off these ads, what measures are in place to guard against them, and how minors have interacted with them. The legislators also ask how Meta uses personal data to target these ads, a secret the company will surely resist disclosing. The letter gives Zuckerberg until September 6 to respond.

Cynthia Murrell, August 26, 2024

Threat. What Threat? Google Does Not Behave Improperly. No No No.

August 21, 2024

green-dino_thumb_thumb_thumb_thumb_thumb_thumb_thumb_thumb_thumb_thumb_thumbThis essay is the work of a dumb dinobaby. No smart software required.

Amazing write up from a true poohbah publication: “Google Threatened Tech Influencers Unless They Preferred the Pixel.” Even more amazing is the Googley response: “We missed the mark?”

image

Thanks, MSFT Copilot. Good enough.

Let’s think about this.

The poohbah publication reports:

A Pixel 9 review agreement required influencers to showcase the Pixel over competitors or have their relationship terminated. Google now says the language ‘missed the mark.’

What?

I thought Google was working overtime to build relationships and develop trust. I thought Google was characterized unfairly as a monopolist. I thought Google had some of that good old “Do no evil” DNA.

These misconceptions demonstrate how out of touch a dinobaby like me can be.

The write up points out:

The Verge has independently confirmed screenshots of the clause in this year’s Team Pixel agreement for the new Pixel phones, which various influencers began posting on X and Threads last night. The agreement tells participants they’re “expected to feature the Google Pixel device in place of any competitor mobile devices.” It also notes that “if it appears other brands are being preferred over the Pixel, we will need to cease the relationship between the brand and the creator.” The link to the form appears to have since been shut down.

Does that sound like a threat? As a dinobaby and non-influencer, I think the Google is just trying to prevent miscreants like those people posting information about Russia’s special operation from misinterpreting the Pixel gadgets. Look. Google was caught off guard and flipped into Code Red or whatever. Now the Gemini smart software is making virtually everyone’s life online better.

I think the Google is trying to be “honest.” The term, like the word “ethical”, can house many means. Consequently non-Googley phones, thoughts, ideas, and hallucinations are not permitted. Otherwise what? The write up explains:

Those terms certainly caused confusion online, with some assuming such terms apply to all product reviewers. However, that isn’t the case. Google’s official Pixel review program for publications like The Verge requires no such stipulations. (And, to be clear, The Verge would never accept such terms, in accordance with our ethics policy.)

The poohbah publication has ethics. That’s super.

Here’s the “last words” in the article about this issue that missed the mark:

Influencer is a broad term that encompasses all sorts of creators. Many influencers adhere to strict ethical standards, but many do not. The problem is there are no guidelines to follow and limited disclosure to help consumers if what they’re reading or watching was paid for in some way. The FTC is taking some steps to curtail fake and misleading reviews online, but as it stands right now, it can be hard for the average person to spot a genuine review from marketing. The Team Pixel program didn’t create this mess, but it is a sobering reflection of the murky state of online reviews.

Why would big outfits appear to threaten people? There are no consequences. And most people don’t care. Threats are enervating. There’s probably a course at Stanford University on the subject.

Net net: This is new behavior? Nope. It is characteristic of a largely unregulated outfit with lots of money which, at the present time, feels threatened. Why not do what’s necessary to remain wonderful, loved, and trusted. Or else!

Stephen E Arnold, August 21, 2024

A Xoogler Reveals Why Silicon Valley Is So Trusted, Loved, and Respected

August 20, 2024

green-dino_thumb_thumb_thumb_thumb_thumb_thumb_thumb_thumb_thumb_thumbThis essay is the work of a dumb dinobaby. No smart software required.

Amazing as it seems, a Xoogler — in this case, the former adult at Google — is spilling the deepest, darkest secrets of success. The slick executive gave a talk at Stanford University. Was the talk a deep fake? I heard that the video was online and then disappeared. Then I spotted a link to a video which purported to be the “real” Ex-Google CEO’s banned interview. It may or may not be at this link because… Google’s policies about censorship are mysterious to me.

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Which persona is real: The hard edged executive or the bad actor in the mirror? Thanks, MSFT Copilot. How is the security effort going?

Let’s cut to the chase. I noted the Wall Street Journal’s story “Eric Schmidt Walks Back Claim Google Is Behind on AI Because of Remote Work.” Someone more alert than I noticed an interesting comment; to wit:

If TikTok is banned, here’s what I propose each and every one of you do: Say to your LLM the following: “Make me a copy of TikTok, steal all the users, steal all the music, put my preferences in it, produce this program in the next 30 seconds, release it, and in one hour, if it’s not viral, do something different along the same lines.” That’s the command. Boom, boom, boom, boom. So, in the example that I gave of the TikTok competitor — and by the way, I was not arguing that you should illegally steal everybody’s music — what you would do if you’re a Silicon Valley entrepreneur, which hopefully all of you will be, is if it took off, then you’d hire a whole bunch of lawyers to go clean the mess up, right? But if nobody uses your product, it doesn’t matter that you stole all the content.
And do not quote me.

I want to point out that this snip comes from the Slashdot post from Msmash on August 16, 2024.

Several points dug into my dinobaby brain:

  1. Granting an interview, letting it be captured to video, and trying to explain away the remarks strikes me as a little wild and frisky. Years ago, this same Googler was allegedly annoyed when an online publication revealed facts about him located via Google.
  2. Remaining in the news cycle in the midst of a political campaign, a “special operation” in Russia, and the wake of the Department of Justice’s monopoly decision is interesting. Those comments, like the allegedly accurate one quoted above, put the interest in the Google on some people’s radar. Legal eagles are your sensing devices beeping?
  3. The entitled behavior of saying one thing to students and then mansplaining that the ideas were not reflective of the inner self is an illustration of behavior my mother would have found objectionable. I listened to my mother. To whom does the Xoogler listen?

Net net: Stanford’s president was allegedly making up information and he subsequently resigned. Now a guest lecturer explains that it is okay to act in what some might call an illegal manner. What are those students learning? I would assert that it is not ethical behavior.

Stephen E Arnold, August 20, 2024

Telegram Rolled Over for Russia. Has Google YouTube Become a Circus Animal Too?

August 19, 2024

green-dino_thumb_thumb_thumb_thumb_thumb_thumb_thumb_thumb_thumbThis essay is the work of a dumb dinobaby. No smart software required.

Most of the people with whom I interact do not know that Telegram apparently took steps to filter content which the Kremlin deemed unsuitable for Russian citizens. Information reaching me in late April 2024 asserted that Ukrainian government units were no longer able to use Telegram Messenger functions to disseminate information to Telegram users in Russia about Mr. Putin’s “special operation.” Telegram has made a big deal about its commitment to free speech, and it has taken a very, very light touch to censoring content and transactions on its basic and “secret” messaging service. Then, at the end of April 2024, Mr. Pavel Durov flipped, apparently in response to either a request or threat from someone in Russia. The change in direction for a messaging app with 900 million users is a peanut compared to Meta WhatsApp five million or so. But when free speech becomes obeisance I take note.

I have been tracking Russian YouTubers because I have found that some of the videos provide useful insights into the impact of the “special operation” on prices, the attitudes of young people, and imagery about the condition of housing, information day-to-day banking matters, and the demeanor of people in the background of some YouTube, TikTok, Rutube, and Kick videos.

I want to mention that Alphabet Google YouTube a couple of years ago took action to suspend Russian state channels from earning advertising revenue from the Google “we pay you” platform. Facebook and the “old” Twitter did this as well. I have heard that Google and YouTube leadership understood that Ukraine wanted those “propaganda channels” blocked. The online advertising giant complied. About 9,000 channels were demonetized or made difficult to find (to be fair, finding certain information on YouTube is not an easy task.) Now Russia has convinced Google to respond to its wishes.

So what? To most people, this is not important. Just block the “bad” content. Get on with life.

I watched a video called “Demonetized! Update and the Future.” The presenter is a former business manager who turned to YouTube to document his view of Russian political, business, and social events. The gentleman — allegedly named “Konstantin” — worked in the US. He returned to Russia and then moved to Uzbekistan. His YouTube channel is (was) titled Inside Russia.

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The video “Demonetized! Update and the Future” caught my attention. Please, note, that the video may be unavailable  when you read this blog post. “Demonetization” is Google speak for cutting of advertising revenue itself and to the creator.

Several other Russian vloggers producing English language content about Russia, the Land of Putin on the Fritz, have expressed concern about their vlogging since Russia slowed down YouTube bandwidth making some content unwatchable. Others have taken steps to avoid problems; for example, creators Svetlana, Niki, and Nfkrz have left Russia. Others are keeping a low profile.

This raises questions about the management approach in a large and mostly unregulated American high-technology company. According to Inside Russia’s owner Konstantin, YouTube offered no explanation for the demonetization of the channel. Konstantin asserts that YouTube is not providing information to him about its unilateral action. My hunch is that he does not want to come out and say, “The Kremlin pressured an American company to cut off my information about the impact of the ‘special operation’ on Russia.”

Several observations:

  1. I have heard but not verified that Apple has cooperated with the Kremlin’s wish for certain content to be blocked so that it does not quickly reach Russian citizens. It is unclear what has caused the US companies to knuckle under. My initial thought was, “Money.” These outfits want to obtain revenues from Russia and its federation, hoping to avoid a permanent ban when the “special operation” ends. The inducements (and I am speculating) might also have a kinetic component. That occurs when a person falls out of a third story window and then impacts the ground. Yes, falling out of windows can happen.
  2. I surmise that the vloggers who are “demonetized” are probably on a list. These individuals and their families are likely to have a tough time getting a Russian government job, a visa, or a passport. The list may have the address for the individual who is generating unacceptable-to-the-Kremlin content. (There is a Google Map for Uzbekistan’s suburb where Konstantin may be living.)
  3. It is possible that YouTube is doing nothing other than letting its “algorithm” make decisions. Demonetizing Russian YouTubers is nothing more than an unintended consequence of no material significance.
  4. Does YouTube deserve some attention because its mostly anything-goes approach to content seems to be malleable? For example, I can find information about how to steal a commercial software program owned by a German company via the YouTube search box. Why is this crime not filtered? Is a fellow talking about the “special operation” subject to a different set of rules?

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Screen shot of suggested terms for the prompt “Magix Vegas Pro 21 crack” taken on August 16, 2024, at 224 pm US Eastern.

I have seen some interesting corporate actions in my 80 years. But the idea that a country, not particularly friendly to the U.S. at this time, can cause an American company to take what appears to be an specific step designed to curtail information flow is remarkable. Perhaps when Alphabet executives explain to Congress the filtering of certain American news related to events linked to the current presidential campaign more information will be made available?

If Konstantin’s allegations about demonetization are accurate, what’s next on Alphabet, Google, and YouTube’s to-do list for information snuffing or information cleansing?

Stephen E Arnold, August 18, 2024

An Ed Critique That Pans the Sundar & Prabhakar Comedy Act

August 16, 2024

green-dino_thumb_thumb_thumb_thumb_thumb_thumb_thumb_thumbThis essay is the work of a dumb dinobaby. No smart software required.

I read Ed.

Ed refers to Edward Zitron, the thinker behind Where’s Your Ed At. The write up which caught my attention is “Monopoly Money.” I think that Ed’s one-liners will not be incorporated into the Sundar & Prabhakar comedy act. The flubbed live demos are knee slappers, but Ed’s write up is nipping at the heels of the latest Googley gaffe.

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Young people are keen observers of certain high-technology companies. What happens if one of the giants becomes virtual and moves to a Dubai-type location? Who has jurisdiction? Regulatory enforcement delayed means big high-tech outfits are more portable than old-fashioned monopolies. Thanks, MSFT Copilot. Big industrial images are clearly a core competency you have.

Ed’s focus is on the legal decision which concluded that the online advertising company is a monopoly in “general text advertising.” The essay states:

The ruling precisely explains how Google managed to limit competition and choice in the search and ad markets. Documents obtained through discovery revealed the eye-watering amounts Google paid to Samsung ($8 billion over four years) and Apple ($20 billion in 2022 alone) to remain the default search engine on their devices, as well as Mozilla (around $500 million a year), which (despite being an organization that I genuinely admire, and that does a lot of cool stuff technologically) is largely dependent on Google’s cash to remain afloat.

Ed notes:

Monopolies are a big part of why everything feels like it stopped working.

Ed is on to something. The large technology outfits in the US control online. But one of the downstream consequences of what I call the Silicon Valley way or the Googley approach to business is that other industries and market sectors have watched how modern monopolies work. The result is that concentration of power has not been a regulatory priority. The role of data aggregation has been ignored. As a result, outfits like Kroger (a grocery company) is trying to apply Googley tactics to vegetables.

Ed points out:

Remember when “inflation” raised prices everywhere? It’s because the increasingly-dwindling amount of competition in many consumer goods companies allowed them to all raise their prices, gouging consumers in a way that should have had someone sent to jail rather than make $19 million for bleeding Americans dry. It’s also much, much easier for a tech company to establish one, because they often do so nestled in their own platforms, making them a little harder to pull apart. One can easily say “if you own all the grocery stores in an area that means you can control prices of groceries,” but it’s a little harder to point at the problem with the tech industry, because said monopolies are new, and different, yet mostly come down to owning, on some level, both the customer and those selling to the customer.

Blue chip consulting firms flip this comment around. The points Ed makes are the recommendations and tactics the would-be monopolists convert to action plans. My reaction is, “Thanks, Silicon Valley. Nice contribution to society.”

Ed then gets to artificial intelligence, definitely a hot topic. He notes:

Monopolies are inherently anti-consumer and anti-innovation, and the big push toward generative AI is a blatant attempt to create another monopoly — the dominance of Large Language Models owned by Microsoft, Amazon, Google and Meta. While this might seem like a competitive marketplace, because these models all require incredibly large amounts of cloud compute and cash to both train and maintain, most companies can’t really compete at scale.

Bingo.

I noted this Ed comment about AI too:

This is the ideal situation for a monopolist — you pay them money for a service and it runs without you knowing how it does so, which in turn means that you have no way of building your own version. This master plan only falls apart when the “thing” that needs to be trained using hardware that they monopolize doesn’t actually provide the business returns that they need to justify its existence.

Ed then makes a comment which will cause some stakeholders to take a breath:

As I’ve written before, big tech has run out of hyper-growth markets to sell into, leaving them with further iterations of whatever products they’re selling you today, which is a huge problem when big tech is only really built to rest on its laurels. Apple, Microsoft and Amazon have at least been smart enough to not totally destroy their own products, but Meta and Google have done the opposite, using every opportunity to squeeze as much revenue out of every corner, making escape difficult for the customer and impossible for those selling to them. And without something new — and no, generative AI is not the answer — they really don’t have a way to keep growing, and in the case of Meta and Google, may not have a way to sustain their companies past the next decade. These companies are not built to compete because they don’t have to, and if they’re ever faced with a force that requires them to do good stuff that people like or win a customer’s love, I’m not sure they even know what that looks like.

Viewed from a Googley point of view, these high-technology outfits are doing what is logical. That’s why the Google advertisement for itself troubled people. The person writing his child willfully used smart software. The fellow embodied a logical solution to the knotty problem of feelings and appropriate behavior.

Ed suggests several remedies for the Google issue. These make sense, but the next step for Google will be an appeal. Appeals take time. US government officials change. The appetite to fight legions of well resourced lawyers can wane. The decision reveals some interesting insights into the behavior of Google. The problem now is how to alter that behavior without causing significant market disruption. Google is really big, and changes can have difficult-to-predict consequences.

The essay concludes:

I personally cannot leave Google Docs or Gmail without a significant upheaval to my workflow — is a way that they reinforce their monopolies. So start deleting sh*t. Do it now. Think deeply about what it is you really need — be it the accounts you have and the services you need — and take action.  They’re not scared of you, and they should be.

Interesting stance.

Several observations:

  1. Appeals take time. Time favors outfits like losers of anti-trust cases.
  2. Google can adapt and morph. The size and scale equip the Google in ways not fathomable to those outside Google.
  3. Google is not Standard Oil. Google is like AT&T. That break up resulted in reconsolidation and two big Baby Bells and one outside player. So a shattered Google may just reassemble itself. The fancy word for this is emergent.

Ed hits some good points. My view is that the Google fumbles forward putting the Sundar & Prabhakar Comedy Act in every city the digital wagon can reach.

Stephen E Arnold, August 16, 2024

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