Sunday, December 1, 2024

The Forecast: Search after Google

Plus, artificial surf parks.

Welcome back to The Forecast, a new newsletter from Bloomberg's Weekend Edition. We're here to help you think about the future — from next week to next decade — with predictions and analysis from around the world. Let us know what you think so far.

This week we're looking at the future of search, tough times for Japanese carmakers and the rise of faux surf parks. Also, news to watch from the weekend: On Saturday, Syrian insurgents took over most of Aleppo, the largest city in the country. 

Week Ahead

Monday: Manufacturing data f0r the US, UK, Eurozone, Canada and Russia will give clues on global trade heading into next year; Cyber Monday sales will cap what's expected to be a tough weekend for US retailers struggling with slower growth.

Tuesday: Brazil releases third-quarter GDP data amid concerns that its economy is running too hot; Salesforce is widely expected to report strong earnings on the back of growing AI demand.

Wednesday: Investors will be looking for signs in the OECD's economic outlook that headline inflation is subdued and confidence is improving.

Thursday: At an OPEC+ meeting delayed from Dec. 1 amid tensions over quotas, the group will consider reviving halted production in January. 

Friday: US payroll and unemployment data will assess the health of the labor market as the Fed weighs whether to cut interest rates mid-month. India's growth has been slumping — increasing pressure on its central bank — but Bloomberg Economics' Abhishek Gupta expects no rate cuts for now.  

After Google Search

The rise of OpenAI's ChatGPT has sparked talk of a new model of search in which artificial intelligence delivers decisive answers, rather than the page of links popularized by Google. But the biggest challenge for companies hoping to capitalize on that idea has been a lack of data — the kind that Google amassed through decades of running the internet's dominant search engine. 

Enter the US Justice Department, which last month proposed major changes to Google after a federal judge's landmark ruling that the tech giant illegally monopolized online search. The DOJ's proposed remedies include a forced sale of Google's Chrome browser and a provision forcing the tech giant to make the data it uses to generate search results available to rivals. Together, those two steps could upend search.

The DOJ isn't taking a position on who Google should sell Chrome to, but people familiar with the agency's thinking say it sees a wide range of possibilities. Options include US-based AI startups like OpenAI or Perplexity, or even an investment firm hoping to enter the red-hot market for generative AI services.

A new owner for Chrome, combined with the ability to replicate Google's search results, could "completely transform the advertising market," said Adam Epstein, the chief executive of adMarketplace, who met with the DOJ multiple times as the agency mulled its proposal for the judge.
 
Still, that scenario is a long shot.

First, Judge Amit Mehta, who is overseeing the case and is expected to rule on a remedy this summer, may not go for the DOJ's proposals. (Google has signaled it would aggressively counter the agency's recommendations, which it called "wildly overbroad," when it submits its own views this month.) Second, sharing Google's data with other companies may not have the intended effect. The EU's Digital Markets Act requires something similar, but DuckDuckGo, a rival search engine, contends that in practice it provides "little to no utility to competing search engines."
 
Finally, whatever Judge Mehta rules might not come to pass. Two decades ago, a federal judge ordered a breakup of Microsoft. Then the US presidency switched parties and the new DOJ took a different approach. Microsoft reached a settlement with antitrust prosecutors for a diminished penalty.

— Davey Alba and Leah Nylen, Bloomberg News

Predictions

"The market capitalization of US stocks is approaching $62 trillion — more than twice the size of the economy, and at a ratio that Warren Buffett explicitly warned about more than two decades ago… Buffett commented back in 2001 that 'if the percentage relationship [between market cap and GDP]… approaches 200%… you are playing with fire.'" — Ven Ram, Macro View (Terminal subscribers only)

"Valuations on US banks are at levels where recent history suggests a steep price decline is almost certain." — Sebastian Boyd, Macro View (Terminal subscribers only)

"One scientific simulation modeled how a single Russian tactical strike, in the space of less than an hour, could escalate into a full nuclear exchange that left 44 million dead and 57 million injured, not counting the radiation fatalities that come later." — Andreas Kluth, Bloomberg Opinion

"Rapidly depleting gas reserves and looming supply cuts from Moscow have the makings of a fresh energy crisis for Europe… The situation is about to get worse with gas deliveries that helped fill reserves in 2024 likely unavailable next year." — Anna Shiryaevskaya and Priscila Azevedo Rocha, Bloomberg News 

Artificial surf parks are proliferating. "Thanks to advances in computational fluid dynamics — the science of how water flows — and the rapidly declining cost of computing power, surfer-entrepreneurs have cracked the code on how to replicate the complex physics of breaking ocean waves." — Todd Woody, Bloomberg Green

Keep an Eye on

As China's assault on the world's auto industry gathers speed, Japan's national champions are emerging as some of the biggest victims.

In China itself, the world's largest car market, Japanese automakers are fighting for survival as local competitors flood showrooms with electric vehicles. The same Chinese companies are pushing into Southeast Asia, rapidly gaining ground in what has long been a stronghold for legacy brands like Toyota, Honda and Mitsubishi.

The loss of market share in Asia also portends a potential slide in Europe and the US, although Chinese carmakers largely don't sell passenger cars in the US due to tariffs. As a group, Japanese carmakers have been slow to shift to fully electric vehicles. That could cost them dearly as they fall further behind in an industry where winners are being minted based on smart software and cutting-edge battery technology.

— Yasufumi Saito, Jin Wu and Nicholas Takahashi, Bloomberg News

What Are the Chances...

50%
The chance (as of 6pm ET on Friday) that Bluesky hits 30 million users by Jan. 1, according to Metaculus, a no-money prediction platform. The social media app reported adding 1 million users on Nov. 15 alone and recently said it surpassed 20 million total users

Weekend Reads

Have a great Sunday and a productive week, and don't forget to tell us what you think about The Forecast!

—Walter Frick, Duncan Mavin and Katherine Bell, Bloomberg Weekend Edition; Davey Alba, Leah Nylen, Yasufumi Saito, Jin Wu and Nicholas Takahashi, Bloomberg News

More from Bloomberg

Enjoying The Forecast? Check out these newsletters:

Explore all newsletters at Bloomberg.com.

No comments:

Post a Comment

It’s the Perfect Time for This Low-Risk, High-Reward Strategy

Get ready for a melt-up…   February 23, 2025 It’s the Perfect Time for This Low-Risk, High-Reward Strategy ...