Google loses more than $70 billion in market cap after changing Youtube algorithm to censor "conspiracy theories"

Google just had over almost $80 million wiped out from it’s market cap and according to CFO Ruth Porat, the problem here is YouTube.
The video sharing site has been around for well over a decade and has become one of Google’s strongest brands after rising to stardom extremely quickly. However, it has become an issue for Google as of late.
On Monday, Google’s parent company, Alphabet, reported that ad revenue grew 15% versus the 24% it saw a year ago. However, it soon saw it’s stock punished severely, falling by more than 8% on Tuesday afternoon.

The Death of YouTube?

In a statement during the company’s earnings call, Porat said that while YouTube clicks continued to grow at a substantial pace during the first quarter, the rate of YouTube click growth rate decelerated compared to the strong Q1 last year, reflecting changes that were made in early 2018, which they thought were an overall additive to the user and advertiser experience.
Porat and Google didn’t expand on precisely what changes at YouTube led to the poor ad revenue growth or any statements after what was said on Monday. However, it’s quite easy to see what happened to YouTube a year ago back in early 2018.

Detrimental Changes

A number of changes made by YouTube in the first quarter of 2018 have proven detrimental to it’s engagement and consequently, it’s stock. So, what were they? Well, in early 2018, Google began making changes to YouTube’s algorithms which were designed to stop harmful content from appearing in the feed of recommended videos you see on the side of a video page.
The aim behind this change was censor so-called conspiracy theories, fake news and everything else that often sent advertisers running away from the platform. Rather than directing the user to a conspiracy theory video, YouTube will show related videos from “authoritative” news sources that the company considered worthy of offering up accurate information.
The changes don't stop there either. In addition to the above changes, YouTube has also removed millions of channels and videos that violated the company’s "harmful content policies", most notably Alex Jones. While it would only seem logical to remove all these harmful and false videos from the site, these so-called “junk” videos were some of the highest engaged videos across the entire platform. They kept YouTube users tuned in to their feeds beyond the video they came to watch, even if the company said they only made up less than 1% of all videos on the site
For many years, employees of YouTube had been warning executives about such content on the site but they chose to ignore it for the money.
YouTube was actually incentivized to keep its algorithms pumping these videos to the top of people’s feeds so people would keep watching and the ad revenue would keep coming in at an ever-increasing rate. Now that YouTube is attempting to clean up the issues and "poor quality" videos that have plagued the site for years, they are taking a hit in regards to their ad revenue growth as well as stock numbers.

Morals Are More Important Than Money

While this new system may be better for the consciences of YouTube’s executives, it is still far from perfect.
During a statement, a Google spokesperson downplayed the amount of revenue generated by "bad content" on YouTube.
Furthermore, the statement did not address the impact removing that content had on revenue growth. The spokesperson said that there’s a misconception about how much money YouTube makes off of recommending any of the junk content. According to them, the truth is that they make very little money from them. In fact, after clearing up their partner program which removes bad actors, YouTube stated that 99% of those impacted creators were making less than $100 a year.
Many people have questioned the truthfulness and accuracy of these claims and oppose the censorship changes.

The Future

Despite all, that's happened over the last year or so, analysts said on Tuesday that they weren't too worried about YouTube’s longer-term prospects and even warned that there are other factors playing into the ad growth deceleration issues that they are experiencing.
That said, the fact is that Google has already lost billions in market cap and analysts have begun downgrading Alphabet’s stock, the biggest question surrounding YouTube today is whether it will continue making improvements to censor and monitor the poor content.
Could this be the end of Google? Many hope so.