It’s going to be a five part series this week, here’s part one.
From it:
The largest beneficiary of online arbitrage is Google, which continues to leverage the basic behavior of people searching for things to drive ever more valuable commercial services; in fact, each Google application which leverages their core algorithmic platform effectively buys low and sells hi. This is probably why Google refuses to disclose much to investors, or why it provides far less information to advertisers than virtually any other online media network. Google does not want anybody to know how it arbs search behavior for increasing returns.
The link to the whole article seems to be wrong.
The link is foobarred.
I can’t find the seth blog
Oh! I just found SETH GOLDSTEIN’s BLOG Transparent Bundles. Is that the Seth you are referring to?
Thanks for the great blog. I have to disagree with this post however. First, I think Google chooses not to disclose more to investors mainly because the founders don’t go along with conventional wisdom. They would rather examine whether something is a wise use of management resources, and if not, don’t just do something just because most everyone else does. I don’t think the keeping trade secrets has much to do with their reason for not feeding the wall street analysts.
Second I disagree that what Google does is arbitrage. They do have a great money making machine. But what they did was provide a service that people liked. Then they found a way to get those who wanted access to their users (to advertise) to pay Google well for the privledge.
Google, to use a internet bubble phrase, is doing a good job monetizing eyeballs. However, that is not arbitrage it is just doing a good job of maximizing revenue and profits. Yes Google is able to make money because they are paid more by advertisers than it costs them to deliver what the advertisers want. But I don’t see how that is more like arbitrage than Toyota selling a car for less than it costs them to make the car.