The Google Tax

from Seth’s Blog

Actually, there are two.

The first is the tax we each pay so that companies can bid against each other to buy traffic from Google. Because their revenue model is (cleverly) built on both direct marketing and an auction, they are able to keep a significant portion of the margin from many industries. They’ve become the internet’s landlord.

The difference between a successful business in New York and an unsuccessful one is just a few percentage points–the successful ones pay 95% of their profit to landlords, while the unsuccessful ones pay 105%.

More here.

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4 Responses to The Google Tax

  1. Connor Kupres January 24, 2020 at 8:27 pm #

    The google tax is an interesting idea to think about. While it is becoming more apparent to all that google has been keeping tabs on our searches to send us ads that we would find relevant, it is new to me that there is a sort of bidding war going on between google and the online ads we see on a daily basis. If we are the primary driving force for the ability of google to advertise effectively makes them control almost all of the online marketing ability. While businesses are beginning to pay 95% premiums on the ad space they use, the consumers on google have effectively created one of the most expensive and profitable ad spaces on the internet. This process has made it almost impossible for new online only business to be created. If the big businesses are willing to pay millions for the small amount of ad space available, how is a small starting business going to get any notice. The short answer is they are not. How can this be fixed? Well it can’t, not without serious comprise. If we want a fair ad space the trillions of users of google would all need to use a different browser as a boycott. This is why I believe Seth in his blog is so correct in calling this a tax of google. It is just something we have to deal with if we want the best possible pool of information at our fingertips. It is comparable to income, if you want a job you just have to pay it. While googles continuously making it more expensive to advertisement with auctions and small business growth continues to slow this monopoly continues to rake in the cash. Google has been continuing to control what was once an open market and is now almost turning the online market into a closed one in which you need a google key to open the door. Google can even be considered as the gate keeper for online only commodities. They are the controller of the funnel that disperses information to its users. If googles wanted to shut off a company the could redirect all related searched to a different company effectively closing off that part of the “funnel”. This may seem like an over exaggeration but googles per year ad revenue has consistently grown by 20% a year. This may seem perfectly fine, but the yearly global economy grows only 4% per year. A company should grow this consistently for this long, it shows a lack of competition. Proving a type of monopoly. Big companies like Expedia and TripAdvisor are reporting 20- 25% loses due to there links being pushed farther down the page in favor of googles own travel agencies. Googles motto for years has been don’t be evil, all the while as google as grown, they have been known to buy business and sell them off piece by piece like a chop shop. The control google has is less of a tax and more of complete control.

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  2. Roger McCurdy III January 24, 2020 at 8:59 pm #

    The Google tax is an interesting thing to think about in the scope of the business world as in order to have a successful online business you must appear high on Google search results. Google is the premier search engine used by the general public and has been for a while, hence the word “google” becoming an official word to look something up. Google knows that they are important so they charge companies for ads. The companies depend on the clicks they get from internet users so their ability to pay google is on a percentage of their income as seth states, essentially a literal tax. This is an issue though, as many businesses fail to gain exposure because they don’t have the money to advertise. Is there a way to fix this problem in the short term? The answer is likely no. Google is so engrained in the public mainstream that moving a large enough portion of the population away from Google and to a search engine such as bing or GoDuckGo is nearly impossible in the short term. In the long term, I think GoDuckGo has a good chance of passing Google. Google is known to sell information to other companies and marketing firms, but GoDuckGo bases their search engine on privacy. In today’s world there are many few places that you can find privacy, especially on the web. Knowing that the search engine you are using will not sell your information to the highest bidder is certainly something that will continue to seem more appealing to the general consumer as time passes. But then does that really get rid of the tax, or will the same companies be willing to shell out those dollars to GoDuckGo instead. This is potentially just the world we have entered into, where the search engine takes most of the profits from otherwise successful companies to keep themselves relevant. This is certainly a bleak future for those relying on those search results, but there are ways to overcome these hardships and eventually it will become a way of everyday business. No one will blink an eye at a “Google Tax” or a “GoDuckGo tax” because they will have been around forever. Just as machinery seems like a given now, many thought industrialization would ruin the economy from lack of jobs. Instead, we will improvise, adapt, and overcome.

  3. Robert Adelson February 7, 2020 at 1:20 pm #

    The Google Tax is something that I did not know about until I read Seth’s blog. It is a topic that interests me, but also shocks and scares me. I am interested in how the online world of business works, and what better way to learn about than discussing Google. However, it shocks me at how much power Google has and the fact that they will only continue to grow even more powerful.

    Google has been very clever and smart of the years; it is why they are the great company they are today. They have created a constant bidding war from other companies to buy traffic from them. They also control which companies can be easier or harder to find, “previously successful businesses like Groupon, Travelocity and Hipmunk suffer.” I find it fascinating how much Google can affect other corporations, before these corporations even interact with them. Corporations know that if they are planning on relying on Google for advertising and being “searched”, they have to plan for the risks as well. Corporations have to look at all available options, because Google is able to dictate what people see on the web. They may rely on being on found in a Google search, but the risk is that Google might not be as helpful as they hoped. Seth says it himself: “If you’re dependent on being found in a Google search, it’s probably worth rethinking your plan.”

    While this whole topic interests me, I was shocked at just how much power Google has and the fact that this is not changing anytime soon. The power to dictate a whole market is insane, it is also insane that Google will only get bigger and more powerful. Typically, when you are at the top you have to watch your back. There is typically someone else who can compete with and eventually knock you down some. However, this is not the case with Google. “The existence of DuckDuckGo doesn’t significantly change Google’s position as a monopoly able to dictate how most people experience everything on the web.” It may seem unfair, but this has happened due to the work and creativity Google has done with their cooperation over the years. Maybe one day they will lose this power, but it certainly is not happening anytime soon.

  4. Arthur Knowler February 14, 2020 at 8:42 pm #

    The google tax is an interesting concept, and it truly shows how the internet has changed the way companies will spend their money and efforts. It is truly baffling to see that companies will spend millions of dollars on something just to gain a slight advantage in internet publicity. I think it is truly impressive to see how Google can take advantage of this market and create a way to alter its search algorithms accordingly. However, I think that the tax poses several problems starting with the way smaller companies are truly unable to get a fair shot to be successful on the internet, concerns about user privacy, and a concerning change in the way the internet is used. Firstly, this tax essentially swallows up all the smaller businesses that cannot compete with multi-million-dollar companies. These smaller companies do not have the same cash to get their websites to show up in people’s search results. In my opinion, the purpose of the world wide web is to allow everyone, especially smaller companies and causes to get their message out to the public without having to pay extra for web browsers to find them. I think that by selling advantages, Google is compromising the vision of the internet. Secondly, as a user of the internet, I have concerns about exactly what allows Google to adjust its algorithms to sell to companies. My guess would be by actually selling data to these companies or simply exploiting data to create a profile for each use. If this is the case, I would feel incredibly uncomfortable with the selling and auctioning of this data. Not only is it unfair but is monopolizing the entire internet in an unprecedented way. My final concern about this new competition is just that it changes the way the Internet operates. The internet used to be completely fair when it comes to things like search results and the traffic that a website receives. As an internet user, it concerns me how these changes will affect the experience I have on the internet. Overall, I believe that this Google tax could greatly impact the ways of the internet.

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