Big Tech




Googles Catch 22

By: Nick Saraev

Google is leading the way in AI innovation, yet this very revolution may limit its advertising capabilities. Possessing cutting–edge technology is one thing, but to stay ahead of the tech curve, Google must develop an alternative revenue model.

Code Red

In response to Microsoft's hefty investments in OpenAI, the creators of ChatGPT, Google, recently announced an urgent 'Code Red'. Despite its recent surge of success, Google has seen a decline in net profit over the past year.

This emergency has resulted in an increase in layoffs; Sundar Pichai, Google’s CEO, stated that when many people were hired over the pandemic, it was planning for “a different economic reality than the one we face today” and must reduce their workforce by 12000 roles.

One reason behind this is advanced chatbots such as ChatGPT, which contain many of the capabilities of a search engine, while also having the ability to carry out commands much more complex than those of search engines.

Sergey Brin

At the 2018 Google I/O conference, Sergey Brin, one of Google's original co–founders, cautioned that AI posed a risk to their business model. He strongly urged that in order to stay ahead of the curve and remain competitive in future markets, they must find ways to diversify their revenue stream.

Brin has recently made a return to Google alongside Larry Page, where they are overseeing plans to integrate a chatbot into Google’s search engine. Given that Brin predicted Google’s current predicament, it is no surprise that he was brought in to address it.

In response, the company has plans to introduce more than 20 new AI products over the next year and release a version of their search engine that integrates chatbot technology – all designed with improving user experience in mind.

The Failed Launch of Bard

Google sought to revolutionize AI with the introduction of "Bard," their chatbot alternative to ChatGPT. Intended to answer peoples' queries in an intuitive way, this was intended as a means of ultimately enhancing Google's search experience – just as Bing has already done with ChatGPT. 

Unfortunately for the tech giant, Bard’s launch was quite flawed. In its debut, it was asked a series of questions, including a question about the recent James Webb Telescope. In this exchange, Bard gave a confident answer about the telescope’s accomplishments. But despite its confidence, Bard’s answer was factually incorrect.

Bard's mistakes mirrored those of ChatGPT, leading to a loss of confidence in Google's latest advancements. This sparked a downward spiral in their stock price.

The AI Catch-22

Bard's misstep in responding to a prompt may appear to be the primary issue, yet beneath the surface lies an even more concerning matter –– Bard failed to outshine ChatGPT when posed with a particular query.

For many years, Google has been the most reliable large–scale search engine, and its prioritization of quality content has led it to take up over 90% of the market.

However, as AI’s potential increases, this could completely change how all search engines operate. In order to stay ahead of competitors, Google is aiming to employ AI in order to maintain a level of quality that puts it above them.

Unfortunately, though, so far, their attempts have only been successful at keeping them on par with other search engines. This poses a challenge for the company: while its own developments may not necessarily increase profits directly (much of which comes from its Ad Search system), they may require an entirely new system of advertising – one that chatbots can help create.

Google’s Revenue Model Going Forward

For Google to remain profitable, it must do more than refine its AI – it needs to adjust its advertising revenue model in response to advancing technology.

Currently, Google's Ad Search system is a major source of income; this is the system through which sponsored ads appear at the top of user searches.

To stay ahead in these changing times, Google must find a way to integrate advertising into its AI advancements while being friendly toward both advertisers and customers.

Doing so will give it an advantage over competitors also utilizing AI. Solutions could include integrating ads into chatbots through product placement or recommending products to users based on their algorithms' predictions of what they are likely to enjoy.

Finding the best method for this type of advertising is vital for Google to continue its dominance as a search engine.

In Summary

Google's Catch-22 highlights a dilemma faced by the company as it seeks to remain competitive in the rapidly evolving landscape of AI innovation. While it is leading the way in developing advanced chatbot technology, this very revolution could limit its advertising capabilities and threaten its profitability. 

The future of Google's dominance as a search engine depends on finding the best method for this type of advertising while being friendly toward both advertisers and customers. Only time will tell whether this comes to fruition – or, indeed, whether another giant comes out on top.