The Web 2.0 Short-Sellers' List
Say, just for the sake of argument, that Web 2.0 is a bubble. If so, and assuming it one day pops, what public companies get hurt? I mishandled a variant of that question last night on CNBC, so I'm looking for better ideas. — Some candidates: — Google.
Context & Ripple Effects
Kedrosky's list is the public-market sequel to an argument that has been building since August, when Micro Persuasion framed the Web 2.0 economic conundrum of fast-growing audiences without obvious economics. His CNBC stumble matters because it forces the question away from private start-up valuations and onto the incumbents whose shares are supposed to absorb the damage if the cycle turns.
First-order effects
- Google lands on a short-seller candidate list at precisely the moment its own disclosures feed the bear case: the just-closed YouTube takeover carries acknowledged copyright-litigation exposure, and Checkout's fee waivers are confirmed spending aimed at unseating PayPal.
- eBay's PayPal business now faces a funded rival that is explicitly giving the service away, turning a payments profit pool into a competitive subsidy.
Second-order effects
- If Google keeps buying user-generated-content properties while waiving fees in payments, analysts will have to price those bets into the core search franchise — the same executives discussing how to compete against search leader Google at the Web 2.0 Summit are effectively betting the balance sheet can fund multiple fronts.
- Start-ups building on free distribution and ad monetization inherit a valuation reference point that is itself on the short list, so any de-rating of Google compresses the exit math for the whole consumer web category.
Third-order effects
- The durable shift is methodological: bubble risk being assessed through public proxies like Google rather than through private rounds means incumbent strategy — data portability promises, litigation overhang, loss-leading services — gets read as systemic signal, not company-specific noise.
The trend: Public-market scrutiny of Web 2.0 is migrating from whether a bubble exists to which listed incumbents hold the downside, making Google's acquisition and payments spending the sector's de facto stress gauge.