I wrote here about how I thought Google [X] isn’t really a research company, but subterfuge employed by Google for entirely different ends.
John Gruber’s Daring Fireball links to a pair of articles which add some supporting color. The focus is on [X]’s reported 2nd quarter loss of $859 million which at first sounds kind of bewildering… but check out the far more interesting quote near the end of his wrap (emphasis mine):
The combination of big ideas, lofty rhetoric and a strict code of secrecy has made X a source of endless speculation and conspiracy theories. The one you hear most frequently, usually from competitors and venture capitalists, is that X is a giant public relations plan to distract regulators from Google’s search business, which is under scrutiny around the world.
Not precisely the ruse I had in mind (to be fair I don’t often run in circles of VCs), but also not incompatible with the theory I proposed.
Google executes 60.4% of all desktop searches. On the Herfindal-Hershman Index, which measures market concentration, an industry score below 1,000 indicates adequate competition and a score above 1,800 means you should expect scrutiny from the Justice Department.
… The HHI score in desktop search: Juuuust a tad over 4,700.
So knowing that Google made $20.1B revenue in Q2 2016 in a search advertising industry that is screaming for antitrust intervention… I’d say that an $859mm loss (just 4.3% of revenues) is a pretty justifiable expense to keep regulators off your tail.