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Monday, 31 August 2015

Google fights the EU

Google decided to put up a strong fight against the EU anti-competitive charges. See FT article here.
It will be an epic battle lasting years. Hopefully, it will not consume the company's energies the way a similar war has weakened Microsoft, that barely recovered from it if ever.

Friday, 21 August 2015

A busy summer

A lot happened in media this summer. First, the world has really woken up to the fact that streming is going to kick a real dent into the TV/Cable business. As a result many large media conglomerates owning TV or Cable assets saw a drop in their share price. Another interesting news is that News is back in vogue! Pearson has sold the FT to Nikkei for a nice price and The Economist has also been sold at a price comparable to that of Buzzfeed, the hot new media startup in which Comcast made an important investment. Who would have thought a couple of years ago that news (printed news) will still be alive in 2015? A lot happened on the new media/tech side as well. Google reorganized to become Alphabet to become more transparent about its diverse ventures. The bulk of the revenues still come from Google of course.... Facebook surged ahead of other social networks, LinkedIn and Twitter, in particular. It is becoming clear that the scale now matters more than what teens find sexy on social media. We will have an interesting Fall!

Wednesday, 10 June 2015

Blocking ads


Ad blocking can become a real problem for the media industry (see article from The Economist, see also this WSJ article). Ironically, I dont think it'll really affect the big advertisiers (Google, Facebook, etc.). These firms can negotiate with Adblock tech firms to pay a toll for their ads to pass. Similarly, they might be able to force consumers to look at ads: e.g. Google can deny service if adblock is installed - will people say, no I am not using Google? Not clear. On the other hand, what might happen to small sites living of advertising is not clear. In other words, Adblock might lead to an even more concentrated ad market. 

Friday, 5 June 2015

Credit Rating Agencies

Top Credit Rating Agencies (CRAs) have never done better. Their revenues and profits are up - way above levels seen before the crisis. This picture from The Economist shows that their market shares haven't moved a notch after the financial crisis when "aggressive" regulation was introduced to curb CRAs powerful influence on markets. What is ironic, is that this increased monopoly power largely originates from the very regulation that was supposed to introduce more competition in the sector, thereby - as was hoped - also providing more discipline in ratings. None of this happened. Why? The detailes can be read here. The bottom line is that regulation made it so hard to comply with the law that would-be competitors decided never to enter the market. Meanwhile the established agencies with established large market shares could easily amortize the additional fixed costs of compliance. A classic case of bad regulation.....

Tuesday, 12 May 2015

Publishers on Facebook


Facebook has pretty much managed to convince publishers to put their content on its powerful platform. The value proposition is simple: Facebook knows how to sell mobile ads against that content as opposed to helpless publishers whose current revenues from mobile ads are very small. Publishers can keep 70% of the ad revenues sold by the Facebook (they can keep 100% of ad revenues they generate). For publishers, this is a substantial revenue potential, while they have no real alternative. Facebook's mobile display ad revenue share is 35%, by far the largest and still growing fast. Moreover, an overwhelming proportion of the traffic to publishers' sites already comes from Facebook (see WSJ chart), which is mostly accessed by via smartphones. If this trend holds up - as it seems to - publishers have no choice but to upload (some) of their content on Facebook. 

Monday, 20 April 2015

“Mobilegeddon”

This is a cool! Google re-evaluates search rankings based on whether sites are mobile friendly or not. Many will complain but this shows how this general pressure overall benefits consumers. Read more about it at this FT link.

Wednesday, 15 April 2015

Europe going crazy on Google again

Europe has decided to really go after Google by filing formal charges against the search engine (see FT article). It is quite clear that most of this is driven by politics (a former settlement was objected by finance ministers from France and Germany). The French lead the way, of course, by proposing a law whereby Google would need to hand over its proprietary algorithm to the French government so that it can check whether the search engine is fair to its rivals. This level of intervention is totally crazy. Even if one can argue that damage has been done to rival businesses, the resources dissipated in the legal process, lobbying and politics is by no means beneficial to society. To see the unreasonable lobbying that puts pressure on politicians, consider this other FT article on major music groups' attack on Google. The Internet is a fast evolving space with incredible benefits to consumers. Holding back investment and providing negative incetives for innovators is not a wise policy.