Quora: Why Won't Warren Buffet Invest In Google?

Warren Buffett
Berkshire Hathaway CEO Warren Buffett plays bridge during the Berkshire annual meeting weekend in Omaha, Nebraska, May 3, 2015. Rick Wilking/Reuters

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Answer by Gary Mishuris, Managing Partner, Chief Investment Officer at Silver Ring Value Partners:

Warren Buffett discussed his decision to invest in Apple and not Google at length at this year's annual Berkshire Hathaway meeting (you can find insights from the meeting here: 10 Insights from the Berkshire Hathaway Weekend).

The reasons he gave for buying Apple:

  • He believes it's really not a technology company, but a consumer company.
  • This is based on the company's brand and eco-system.
  • The latter creates a loyal community of users with high switching cost, where even if they might prefer some individual non-Apple device better, the ecosystem (iTunes, apps, etc.) keeps them with Apple.
  • The former is because people love Apple's aesthetics, ease of use, etc., rather than purchasing it because of some vastly superior technological advantage.

The reasons he gave for not buying Google:

  • He acknowledged that Google is a very powerful business. He gave an example of how Geico/Progressive are forced to compete on Google for advertising.
  • He made it clear he thought about it hard and re-assessed his view fairly recently.
  • That being said, he came across as believing it has too much technological uncertainty in the long-term, implying that the didn't think that the range of economic outcomes was predictable enough for his liking.

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Quora: Why Won't Warren Buffet Invest In Google? | Opinion