Google: The Critical Issue Has Been Resolved, Anticipated Profits Will Soar, and Shareholder Return Is Also Considered

Google's previous promotion system was based on the expansion of staff. If a department wanted to promote someone, it needed to recruit more people. For example, if the Travel department wanted to create more management positions to provide upward mobility for employees, it needed to add more personnel. Sub-departments like Hotel and Flights were separated to manage, with a team of 10 people working on price accuracy for Hotel, one manager, and one product manager; and a team of 8 people for Flights, one manager, and one product manager.

This was done to create more management positions, but this organizational structure was somewhat contrary to the original intention of the software industry. The internet industry is an industry where marginal profit approaches 100%, and it is an industry that creates profits through economies of scale. The approach of adding redundant staff to increase management layers has made the business model taste different.

After the intervention of activist investors, Google completely changed its incentive mechanism, merging these teams. Now, a team only needs 10 people for price accuracy, one product manager, and one manager to handle the work of hotels and flights. This is equivalent to reversing linearity and correcting the business model again.

I am optimistic about the further increase in Google's profit margins in the future. On one hand, it seems that Large Language Models (LLMs) are very helpful in improving employee efficiency, with an increase in productivity of 30-40%. On the other hand, Google is no longer obsessed with adding staff to provide promotion channels, controlling linear cost stacking and continuing to compound revenue, which greatly boosts profit margins. This is coupled with shareholder returns and the imagination space of large models.