This Week in Australian Startups - 15th February, 2023
This Week in Australian Startups - 15th February, 2023
Usually when an incumbent is being taken on or an industry disrupted it’s a new startup, often very well funded that is able to move at pace and not have to worry about the same things the incumbent does - a classic David vs Goliath.
This time things are a little different, we’ve got a Goliath vs Goliath with Microsoft officially taking on Google with the launch of the new Bing (shame they also didn’t announce a new name).
Google has dominated search and no one has come even close to second, so much so that the Department of Justice is taking Google to court for monopolising digital advertising. CNET has a good breakdown of the lawsuit and what it could mean which you can read here.
Google is being attacked on multiple fronts, its dominance with search has led to a monopoly in digital advertising, albeit competition is just a click away - as much as you may dislike Google, it’s the best product on the market for search by far.
You have to give credit to Microsoft in being very well coordinated in its opening move - it’s even taking on Chrome by embedding new Bing features directly into Edge. The dynamics for Bing compared to Google also make this very interesting.
Google's entire ad model on search is dictated by the user (you) deciding the winner of the auction - choosing which ad is the most relevant, and best for your specific search. By adding in AI, and removing the user choosing the winner fo the auction, this completely disrupts the existing ad business model - both for Google and Bing. The difference is Bing has been nothing more than a running joke with the odd paid placement in a TV show, meaning whilst there is ad revenue it’s not meaningful enough for them to worry about protecting it. For Google the opposite is true.
As Satya Nadella so aptly put it in an interview with the Wall Street Journal “All I need is a few more users, and someone else that I’m competing [with] has to keep all of their users and all of their gross margin”. Despite Microsoft being a Goliath in it’s own right, when it comes to search it’s very much David.
Google has reason to worry, over half its revenue in 2022 was from Search - and with the new Bing having the potential to be a genuine threat in addition to the DOJ trying to break Google down, they are very much in war time and face an existential threat. This could mean more investment into search, potentially taking focus and funds away from areas such as Google Cloud.
Google has not been sitting idly by, being very quick, in what looks like in a knee jerk reaction, to announce the launch of Bard. The launch did not go smoothly in Paris, with the first live demo of Bard having factual errors leading to a loss of $100 billion in market cap. It’s worth noting that it wasn’t due to the announcement of the new Bing, but the failed launch of Bard that led to this - an indication the market is more concerned about what Google will do, rather than Microsoft. Google employees weren’t too happy about it either.
Whilst Bard has made mistakes, no one noticed Bing has made some big factual mistakes too, including making information up completely and sometimes a bad attitude.
Microsoft certainly has an interesting play here, with expansion of AI into Office and Azure providing further revenue streams. However, when it comes to search it’s important to remember the extremely strong moat Google has in Chrome, Android and iOS.
As of 2022, Chrome had 65% market share and Android 71.8% - both of these have Google as the default search engine and won’t be changing being property of Google. The $8-12 billion deal Google has with Apple also ensures it’s the default search engine on iOS which represents 27.6% of the market - meaning Google is the default search for for 99.4% of all mobile devices.
Distribution is extremely important and Google has by far the biggest advantage here. Bing is still an inferior product, even with the introduction of AI.
It’s still early to tell, and it would be naive to think Google is done for - but as a consumer I’m excited to see what this will mean for search.
Top News
US-backed payroll software co Humanforce is the latest owner of fintech Earnd, more here
Atlassian shares plunge after another quarterly loss, more here
Back to day one: How Australia’s tech ecosystem began, more here
Deputy announces new CEO Silvija Martincevic more here
Healthtech x Fintech’s Biggest Prize: The Financial Operating System for Healthcare, more here
Big tech layoffs free up talent for Australia, more here
Self-driving tech startup Baraja just shed 75% of its workforce, more here
Twilio cuts 17% of its workforce just months after previous round of layoffs, more here
Biotechs scramble as Australia leads world in psychedelics, more here
Instagram founders launch Artifact to rival Twitter and tackle misinformation, more here
SpaceX prepares for a massive test this week: Firing all 33 Starship engines at once, more here
Andrew and Nicola Forrest back female founders at Startmate, more here
Apple Hires Its First People Officer in Executive Reshuffle, more here
FUNDED 2022: Australian Startup Funding in Review, download report here
The State of Australian Startup Funding 2022, download report here
Disney’s laying off 7,000 as streaming boom comes to an end, more here
Most people can tweet again, but Twitter still has issues, more here
Netflix starts cracking down on password sharing in four new markets, including Canada, more here
Warner Bros. Discovery plans to keep Discovery+ as a stand-alone streaming service in the US, more here
Zoom layoffs impact 15% of staff, more here
Nintendo takes long view on tech crisis, bumping employee pay by 10%. More here
Australian Funding Rounds
Osher Günsberg & ethicist Peter Singer back mushroom ‘meat’ startup Fable Food Co in $12.3 million Series A, more here
Workplace coaching platform Fingerprint for Success raises $6.5 million, more here
Scalp care brand Straand secures a $2 million investment from Unilever Ventures, more here
Queensland job matching startup Getahead raises $1.38m pre-Seed round, more here
Tracksuit scores $6.8 million in seed funding to change how brands track and communicate their value, more here
Software-focused VC EVP jags $100 million for its 4th fund, more here
Climate change agtech startup Loam raises $105 million Series B, more here
International Highlights
Kiwi brand tracking startup Tracksuit bags $6.8 million Seed round, more here
Andrew Forrest backs Kiwi hydrogen tech startup Fabrum in NZ$23 million Series A, more here
Startup MindsDB Raises $16.5 Million To Power The AI Race In The Workplace, more here
Egyptian health tech Yodawy raises $16M, backed by Delivery Hero Ventures, more here
Data observability platform Acceldata raises $50M, more here
Jobber fixes on $100M as its platform for home services pros hits 200K users, more here
Ushur, which aims to automate aspects of the customer experience, raises $50M, more here