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  "documentTitle": "Alphabet (GOOGL)",
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  "authorName": "Christopher Hohn",
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      "text": "We are writing to express our view that the cost base of Alphabet is too high and that management needs to take aggressive action.",
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      "text": "Google’s Search business has high operating leverage and is not labour intensive. Despite strong revenue growth, operating leverage has been minimal over the last five years. In Q3 2022, total expenses grew 18% year-over-year while revenues grew only 6%. The EBIT margin of the Google Services segment contracted from 39% in 2021 to 32% in Q3 as a result.",
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      "text": "Our conversations with former executives of Alphabet suggest that the business could be operated more effectively with significantly fewer employees. We agree with Altimeter Capital's Brad Gerstner, who wrote: \"It is a poorly kept secret in Silicon Valley that companies ranging from Google to Meta to Twitter to Uber could achieve similar levels of revenue with far fewer people.\"",
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      "text": "We are writing to express our view that the cost base of Alphabet is too high and that management needs to take aggressive action. The company has too many employees and the cost per employee is too high. Management should publicly disclose an EBIT margin target, substantially reduce losses in Other Bets and increase share buybacks.",
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      "text": "TCI has been a significant shareholder of Alphabet since 2017. We currently own shares valued at more than $6 billion, reflecting our strong conviction in Alphabet's future.",
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      "text": "During a period of high growth between 2017 and 2021, revenues increased at an annual rate of 23%, cost discipline was not a priority. However, cost discipline is now required as revenue growth is slowing. Cost growth above revenue growth is a sign of poor financial discipline.",
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      "text": "It is a poorly kept secret in Silicon Valley that companies ranging from Google to Meta to Twitter to Uber could achieve similar levels of revenue with far fewer people. — Brad Gerstner (Altimeter Capital)",
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