How would somebody reading the emails game the system? The only effective moves are to pass if the price is too high, or bid the minimum increment if you think it is still cheap enough. Passing when the price is lower than your threshold is obviously losing. Raising more than the minimum has no value.
You could drive up the price by continuing to bid even when past your threshold, but only after an opponent also bids. But first, that does not get you any benefit, it just inconveniences a rival. And second, this will lead to a tie, which presumably has 50/50 odds of you ending up the winner.
I had a similar question about the backpack: they thought they could open it and find out what Baidu’s bidding strategy was. But that knowledge would have had no value to them. The outcome would not change.
This depends on the exact nature of the object being auctioned. The details matter a lot. Some good economists have worked on this problem both in theory and empirically for a long time.
Under independent private valuation (where the value of the object is completely idiosyncratic to you), your thought is (AFAIK) correct. Here think of art: ignoring resale value, how much someone else would pay for an object depends on how much he likes it, but doesn't have anything to do with how you should bid - your bid is a function of how much you like it. (To a first approximation - again the details of the auction format really matter.)
In a common value situation (where the value of the underlying object to any player is the same, but players _signals_ (an input to their beliefs) about that value contain an idiosyncratic component), you might learn something about the quality of your own signal by knowing something about the bids of other players in the auction. For example: are you about to overpay b/c you believe Hinton's time is worth a lot more than Google and Baidu believe it to be worth??
The phrase "the winner's curse" was invented for this problem in the context of bidding for offshore oil leases. The value to all players (the number of barrels of oil in the field) is the same, but they have different beliefs about what that number is. The winner's curse is that the highest bidder was generally the most optimistic about the value of the field. It's a "curse" b/c the optimism was frequently not justified.
What was actually being auctioned here is a little unclear - something like "the time and expertise of Hinton + two grad students", but it's plausible that Google, Microsoft and Baidu could have made equally good use of it. It reads more like a common value setting, that is. So knowing the bids can matter.
If you want to know more about auction theory (this comment may already be more than you want to know!), I can recommend Krishna's "Auction Theory" or Milgrom's "Putting Auction Theory to Work."
Raising above the minimum increment does have value.
If Baidu is currently winning at say $21M, Google might bid $22M if they know Microsoft will not bid in that round, but might bid $22.1M if they know Microsoft will bid $22M in that round. (Or $23.6M if they know Microsoft will bid $23.5M.)
Or suppose Microsoft is willing to go to exactly $22.5M, Baidu to exactly $23.0M, and Google to $40M. If Google can get that information, Google can bid $22.6M and beat both Baidu and Microsoft (if Baidu doesn’t bid this round, because they’re anticipating a $22M bid this round that they’ll cover at $23M next round).
Not sure I buy it. The limits here are more 'go talk to your boss' than 'stop bidding when it gets to $XXMM' for everyone involved except for Deepmind (which was later also bought by teh googs).
Furthermore, execs are creatures of emotion and whimsy, rather than strictly rational operators. As the price soars higher, they see that everyone at the table values the thing highly, and are likely willing to increase their max bid as their sense of FOMO increases... Subincrements aren't going to matter much, except to ratchet up the feelings at the table even higher, faster.
While it seems reasonable to assume there is no advantage in the perfect information scenario, it feels wrong. For large auctions perhaps a pattern emerges in which a rival strategy could be inferred.
Of course in the end it didn't matter! Hinton subconsciously knew he wanted to join Goog. And may have been inadvertently signalling such all along. And the American rivals themselves were probably colluding as well to keep China in check.
I suspect this "history" of Deep Learning was quite dry to begin with. As it mostly featured academics. Some cloak and dagger style suspense was peppered in to make it a more exciting read ;)
Maybe Google really doesn't like Microsoft or vice versa and they would try to out bid each other to prevent the other from winning, but they would both let another 3rd party win.
It is a bit surprising that they didn’t use neutral 3rd party as arbiter, and that they didn’t go ahead with Dutch auction. They would be done in few hours with very close result.
Another surprising thing is that there were no good will clause, ie that they could terminate auction and refuse to work for the winner (which they effectively did).
You could drive up the price by continuing to bid even when past your threshold, but only after an opponent also bids. But first, that does not get you any benefit, it just inconveniences a rival. And second, this will lead to a tie, which presumably has 50/50 odds of you ending up the winner.
I had a similar question about the backpack: they thought they could open it and find out what Baidu’s bidding strategy was. But that knowledge would have had no value to them. The outcome would not change.