Baidu and Yahoo China, two of the most popular search engines in China, facilitate the country’s near 100% rate of downloaded music that is stolen. That’s right, almost all music downloaded in China is stolen (more proof that the Chinese are smarter than us). Other search engines in China, like Google China, don’t have a built-in mp3 download tab, and are pissed that they can’t gain search engine market share.
The International Federation of the Phonographic Industry (and the world of tomorrow), a consortium that includes reps from Sony BMG, Universal and Warner, is on the case, suing nearly everyone in China. The organization reportedly wins 90% of its lawsuits, but loses suits against the big boys like Baidu, which entrenches the current search engine pecking order by crippling the little guy… with slaps on the wrist. Since the averages damages awarded per lawsuit amount to $130 (yes, dollars), getting sued isn’t that big of a deal to a budding search provider. The IFPI spends about $13k per case, which is a bold profit shucking initiative that only the record companies could dream up.
In other search engine news, Google and Yahoo have teamed up with Mercedes to allow each search enginge’s map services to be sent to your car, if your car is a Mercedes. You know the state of auto-navigation is in trouble when car GPS systems are Google mapping a destination. The service will be available on the S-class, CL-class and entire 2008 C-class lineup.
Deaf to Music Piracy [BusinessWeek via Valleywag]
Google, Yahoo to direct your Mercedes [News.com via Valleywag]
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Google
Chinese People Unanimously Support Search Engine’s “Free” Music Initiative
By Keith HahnSunday is the 3 year anniversary of the Google IPO, which means that it’s been three years since you blurted out “I told you guys, it didn’t open anywhere near $100. Short that shit and you’re printing money.”
A 480% three-year return on GOOG later. Whoops.
It’s not to say that you haven’t been on your game at all in the past 3 years. Kicking around some tech stock ideas you did utter the wisdom, “But hey, iPods are cool. It’s like everyone has one of those things. Clearly that market dominance is already priced into Apple’s stock. Just wait until Microsoft gets into the market. I’m telling you, short Apple and you’re printing money.” A 640% three-year return on AAPL since August 2004 and you blew it again.
Ok, ok, we won’t forget your one triumph, which trumps all your other misses. You noticed that the only banker chicks who haven’t gained the “Seamless 15″ eat only NutriSystem bars and are constantly going to the bathroom to either cry or throw them up. This netted you a ridiculous 3,000% return on NTRI, which you bought in August 2004 after that one hot summer managed to not blow up after 8 weeks. Maintaining eye candy on the floor was something you were more than ready to invest in, not to mention put your mouth where your money was going.
Google’s Historic IPO Run: Beatable [BusinessWeek via DealBook]
Yes, says Fortune’s Geoff Colvin. Sure, there have been people claiming Google has hit the ceiling during almost every phase of Google’s unprecedented value creation ascent, but Colvin swears that Google is bound for a tumble. The reason – Google can’t keep investing capital at 13% and getting 53% returns, a spread better than 99% of the Russell 3000. Google has only invested about $9 billion of capital so far but is experiencing diminishing returns, from 111% four years ago, to 82% the year after, to 53% in the last four quarters.
Colvin looks at Google’s implied future economic value added (EVA, or the dollar amount by which return on capital exceeds the cost of capital) in relation to its current share price. His argument:
To live up to the expectations embedded in its current share price, Google would have to increase its EVA, which was $2.4 billion for the past four quarters, by $2 billion annually this year, next year, and every year into the future – forever. So Google’s EVA next year would have to be $4.4 billion; in five years it would have to be $12.4 billion, and so on.
That’s what investors are counting on when they buy Google at today’s price. Are they being realistic? No, they’re not. To hit that EVA target, Google would have to invest $5.1 billion every year at its recent knockout return of 52.5 percent (assuming its capital cost doesn’t vary much). But you can’t invest $5.1 billion every year at 52.5 percent.
Google (Nasdaq: GOOG) is down almost a half a percent in daily trading.
Don’t go gaga over Google [Fortune via CNN Money]
If Mark Zuckerberg wants to know what it’s like to be touched by Sergey Brin and Larry Page (A. Weird at first, then really kind of nice), he’s going to put it out there in no uncertain terms, Brin told DealBook Sun Valley correspondent David Carr yesterday in Sun Valley. “We don’t really look at companies for acquisitions unless they are really interested,” Brin said, not saying that he’s run into with “mixed signals” before but seeming to imply it. “If they come to us, we’d certainly be open to talking,” he added, meaning “You come 90, we’ll come 10.”
Facebook, who turned down a $1 billion offer from Yahoo last year is under the impression that Google et al will want it for its new “Platform” (and mind) at least $2 billion. FB’s recent “growth spurt,” open policy, etc, also has people talking about a big buy, although there are some around these part who think Facebook’s crossover from exclusive to inclusive* (plus its insistence on overloading the page with, what’s the word, crap) should be a signal to companies to stay away and let the thing IPO itself in 2009.
Sun Valley: Google and the Facebook Question [DealBook]
Google’s Brin Says Won’t Pursue Facebook [CNBC]
Exploding Bubbles: Facebook Widgets And Your Butt [Wired]
*while lacking the intrinsic trashiness that makes MySpace’s spread legs okay
In the Web 2.0 parlor game of deciding who’s going to buy facebook, guessing “Google” isn’t exactly earth-shattering, but it’s probably the most accurate guess one could make. Saul Hansell of the New York Times Bits Blog does just that, reasoning that Google might buy facebook just to cockblock rivals (a little too late for that, as I’m not sure any of Google’s rivals would pony up the $$ at this point). Our guess at DB is “none of the above” – since we don’t think any company will (would or should) pay what Zuckerberg wants for his “platform,” and the thing will just IPO in early 2009 or even late next year.
Facebook’s growth, and more importantly, it’s marketing, give Zuckerberg most of the negotiating leverage when it comes to a potential deal. From the Bits Blog:
The bottom line is that this gives Mark Zuckerberg, Facebook’s young founder, chief executive and largest stockholder, a lot of options. He can sell the company for a lot of money, take it public or just grow with internally generated cash as was the strategy at Google, a company he idolizes.
By the way, if Zuckerberg does sell, my guess is that it’s Google that buys Facebook. Yahoo needs it much more. But Google has a penchant for using its financial muscle to keep hot companies out of the hands of rivals (wresting YouTube from the News Corporation and DoubleClick from Microsoft, for example).
3.6 Million New Faces [New York Times Bits Blog via DealBook]
Smart people would rather work at Google than Goldman Sachs, Bloomberg reports today. One reason is that “Goldman’s current package is not enough to compete with West Coast IT companies.” But then again, if you work at Goldman, you get to play with Excel all day. It’s so hard to decide, we know. Having difficulty picking one G over the other? We’ve broken it down for you, after the jump.
Goldman Meets Match in Googleplex When Recruiting Graduates [Bloomberg]
From the WSJ’s MarketBeat column, Google is bigger than Berkshire Hathaway in terms of market cap. Coming off the second worst week of the year for stocks, and the end of the 14 quarter streak of double-digit earnings growth for S&P companies, Google now has a market cap of $166.3bn and Berkshire Hathaway has a market cap of $165.6bn. Berkshire makes more net income than Google makes in revenue, but has worse margins, growth and is void of that whole ‘impending world domination’ ethos. Berkshire companies pull in $98bn in revenue and $11bn in net income while Google pulls in $11bn of revenue and $3bn in net income. Google has a 29% LTM net profit margin, which is the 8th highest in the NASDAQ-100, and just ahead of Microsoft’s 28%.
Midday Tidbits: Google, Bigger Than Berkshire [Wall Street Journal MarketBeat]
Google, the company that’s trying to catalog every word that’s ever been bound, reads your email to provide advertisements and doesn’t have a problem with displaying the street-level view picture of 44th and 8th just as you were walking into Peep World to ask directions (what are the odds!) on its site, draws the line at an operating system’s ability to scan your hard drive.
Google wrote a 50-page antitrust love letter to the Justice Department outlining how Windows Vista looks at all the porn on your computer through its desktop search feature. Google also has some problems with Vista’s destroy Google “integrated search” customization and the indexing of desktop files. Google’s specific complaints, from the Wall Street Journal:
In its April white paper, Google alleged that Microsoft didn’t allow search bars in Vista that consumers can use to initiate searches to work with desktop-search software other than Microsoft’s, said lawyers familiar with the matter. In addition, Google argued it was practically impossible for consumers to turn off the indexing feature of Microsoft desktop-search software that catalogs users’ files, which meant a computer’s performance was slowed down if it used a second desktop-search application.
Google has a long history of getting bored enough to try and cause some legal troubles for Microsoft, usually by taking the antitrust angle. Last year Google claimed that Microsoft was pushing its web search feature by using its influence in the over the browser software market to the detriment of competitors. Microsoft doesn’t plan to do anything about any of this, as Google continues to plan “the invasion” phase of its business plan.
Google Intensifies Microsoft Fight [Wall Street Journal]
Google bought startup PeakStream for an undisclosed amount yesterday. Prior to the acquisition, PeakStream raised over $17mm in venture funding from big name venture shops Sequoia Capital and Kleiner Perkins Caufield and Byers. The company provides resources to program multicore chips like GPUs, which are often used in graphics cards. Since multicore chips use several integrated processors they are faster than traditional x86 chips popularized by Intel, but harder to program.
The rumors are that Google may be starting to use GPUs to boost server performance, to compliment existing x86 chips. Not evil, Google was ambiguous as possible about its use of PeakStream, and released a statement that said it ‘looks forward to providing PeakStream with additional resources.’ I guess all PeakStream needed was the Google employee free lunch to reach the next phase of its business plan. Google, on the other hand, continues to act more and more like the mice in Hitchhiker’s Guide to the Galaxy, compiling the results of its experiments on human thought and behavior… or the mackinaw trout in Odell Lake, able to eat anything (barring an angler in a chub or plankton).
Google Purchases Start-Up PeakStream [Wall Street Journal]
We’re told by a trader at a New York investment boutique that Google will split 10-to-1. There have been many rumors of splits in the past but our source claims that this time it’s for real.
If he’s right, this would mark a complete about face for Google. At the Google shareholder meeting earlier this month CEO Eric Schmidt told shareholders, “We are not considering splitting and have not for a long time.” That’s about as unequivocal as you can get. So we’re maintaining a skeptical stance about this rumor.
Google’s anti-split stance, however, makes it an anomaly among public tech companies. Yahoo, eBay and Microsoft have all split. And Google’s share price—it’s closing in on $500 and some analysts predict it might go as high as $600—make it a prime candidate for splitting. High share prices are considered by many to be a barrier to investment by ordinary investors, although there doesn’t seem to be having much trouble finding willing buyers for Google shares.
One person who doesn’t seem troubled by the high share price is Eric Schmidt, who exercised options for 57,086 shares of common stock under a prearranged trading plan, according to Securities and Exchange Commission filings on Tuesday.
Google: No Plans for Stock Split [thestreet.com]
Google: Where’s the stock split? [cnet.com]
Google CEO Exercises Options [Forbes]
Are you completely incapable of making the most basic decisions on your own, including “What should I have for dinner” and “How should I touch myself?” Don’t sweat it—while it’s true, yes, you are not in tune with your own body, some day, in the very near future, none of that will matter, thanks to a little thing called Google, another little thing called invasion of privacy and another little thing called monetizing this racket.
Eric Schmidt, Google’s chief executive, said gathering more personal data was a key way for Google to expand and the company believes that is the logical extension of its stated mission to organise the world’s information.
Asked how Google might look in five years’ time, Mr Schmidt said: “We are very early in the total information we have within Google. The algorithms will get better and we will get better at personalization.
“The goal is to enable Google users to be able to ask the question such as ‘What shall I do tomorrow?’ and ‘What job shall I take?’ ”
Yes, in just a short time, Carney will be able to sit comatose, while a computer tells him that he should indeed bite the bullet and buy 1,000 shares of Vonage (sidebar: is that thing bankrupt yet?), take that last hit of meth and RSVP to his twentieth high school reunion, even though he hasn’t yet secured a date. And Google will make another few billion off of what sounds like it’s shaping up to be quite an evening.
In other news, Yahoo sat around and twiddled its thumbs.
Google’s goal: to organise your daily life [Financial Times]
