I'm not sure why variations on this comment are posted so often. What is profound about it, if most people understand how Google makes most of its money, and it provides little insight on understanding the company's decisions?

A more useful model would come from acknowledging that ad revenues do not make it different from other companies, and like most companies its purpose is to maximize its value to its owners. How do they do this? Given a set of {•stuff} what will maximize revenues right now, and increase profits in the future over some time horizon (by reducing costs and by increasing 'stuff' like new product lines or users).

Perhaps I am responding more to other comments that are similar, more than yours in particular, but statements about there being nothing further to understand once you realize Google is ad supported seem to support a couple oversimplifications. One, the primary focus is on monetizing users, while creating services that provide value to users is simple. Two, selling advertising is simple, too.

Let's say that roles could be categorized into revenue strategies and product development, or even that the hours each person works could be categorized this way. How much of the total compensation to employees is paid to each of these categories? And yet, eventually there are no products if they sell no advertising, but there is no way to sell advertising if users don't find value in the services either. Advertising decisions too involve a more complex system of interactions. Even though clients purchase ads based on their perceived value, Google must assume that eventually perceptions will catch up to the actual value of ad impressions if they target the wrong people, or if there is a decline in how clicks translate into sales. Furthermore, though they might make more money this quarter if they placed more ads per page, or made them stand out more, it could cause a decline in users for the future.

I suppose this is a long way of saying that it makes little sense to me why people focus on an intermediate part of the business model as though it is fundamentally different from any other business. Somewhere between creating products and services in order to increase the company's value to its owners there is a step involving advertising. However, there is also a step involving the purchases of electricity. Couldn't people also talk about how Google purchases megawatts of electricity so that it can purchase more megawatts of electricity? The same might be said about terabits of bandwidth capacity or of computing power. Yet, just like advertising, none of those intermediates tell the whole story about how Google creates something of value for its customers and users in order to increase the value of the company. When people talk about other parts of Google than the advertising platform, the larger context is the system of creation and business growth. The larger context is not some aspect of how they monetize.

[•] stuff might include:

- product lines and active users

- talent currently in their employment

- management practices and culture

- assets like data centers

- information only available to Google

- proprietary systems and trade secrets