It’s a simple supply-demand issue that took 30 years to arrive and will take at least 5 years to solve unless the AI bubble pops a lot sooner to stop the hoarding by big tech cloud companies, Chinese state-backed investment and others who are betting it all on black like a has-been Hollywood actor at a Caesars roulette table on a Saturday night. The US never penalized US tech companies for shuttering the dozen memory plants since the 1990s so they just relied on the Koreans and a few others. Now Korea can’t keep up and the US tech companies have been caught with their pants down. While these kinds of people are very bright within their areas of expertise, leading to huge earnings, they’re not bright on most business topics and eventually the market shifts and they’re struggling.

This is where the tech companies founded in the 1970s-2000s are right now. Their original ideas are long in the tooth at best and about to be disrupted, if not already disrupted. The cash cows are looking a little fatigued. They’re looking for a lifeboat to keep the good times going, thinking its AI, just now realizing their industry screwed itself with all of the offshoring but its too late now. They have to once again “fake it until they make it”.

They just hope the people providing the capital don’t start asking about when the market will accept the higher price points so they can break even. That’s a question nobody acknowledges today when it’s asked because they know it could sink the boat if it becomes a hot topic of the month on CNBC and Bloomberg.

X loses money so no margins there. Twitter has never made a profit in its history that I’ve ever heard of. Facebook’s on the way out. 20 years ago it was college age users. 10 years ago it was people over 50. Now it’s a lot of commercial accounts posting as they do on other basically dying or dead platforms. The only sign of life is streaming video and chats related to streaming video. YouTube has been losing users and content creators to both Rumble and Twitch. The right 1/3 of America is on Rumble while Twitch took the gamers. Youtube still has business but they basically gave away enough business to make those 2 relevant.

Alphabet’s dependent on Youtube, cloud services, web search, and related ads to pay for the unprofitable parts of the business, which appears to be where the bulk of their employees work, rather than at the earnings-generators. If they screw up youtube, then they will have to lay a lot of the people in the fun and interesting jobs off, along with the many layers of bureaucracy and non-coders working in jobs that nobody’s quite sure what they do there. They can’t really afford to screw up youtube any more than they have. It can’t merely do well. It has to do great to pay all of their bills. Very similar to the action-hero movies at the movie studio paying for all the unprofitable ones that most people work on

Seems the same pattern at X, probably because they hired in an ex-YouTuber at the top. Moderation algorithms are universally very poorly written and don’t appear to have gotten better in the last 6-8 years when they began using them to replace human moderators. On X they seem to have a timer for new accounts that puts a fake label on accounts as if they’re spamming or a bot, when it’s just a real user with opinions the algorithm is trained to dislike. Same exact crap the old Twitter did. They put the source code on the web and it showed how if you posted or replied on any of a broad range of topics, your account was scored lower until you were deemed low quality and made invisible. It’s like they just wanted cat memes and recipes from elderly women, but not many of them on Twitter or X. Probably because they hired in people from companies where non-controversial topics were a much larger share of what was discussed there. 1 trick ponies who weren’t suitable for doing the same job at X.

There’s no way to boost ad views or MAU with that approach. I believe X will never be profitable due to those people running the show and Musk not ever hiring anyone a lot better to run X. Musk had a similarly bad experience with Solar city. Another company he didn’t know enough about to manage himself and the people he hired to do it weren’t good enough either. If YouTube follows their lead, and continues chasing off creators and users, then they will continue losing out to Rumble and Twitch. Neither of them would be relevant or high growth if not for YouTube “moderation” starting down this road shortly before the pandemic began.