When ChatGPT exploded on the tech scene in November 2022, one of the burning questions in the minds of many technologists was how Google — which, up to that point, was known for its prowess in artificial intelligence — could be caught flat-footed when the starter’s gun sounded in the race to bring generative AI to the masses?
Paul Buchheit, creator of Gmail, suggested some answers to that question in a recent edition of the Y Combinator Startup podcast.
Buchheit, who left Google in 2006, maintained that after the company’s founders, Larry Page and Sergey Brin, began to reduce their roles in Google operations, the development of artificial intelligence began to be tempered by other considerations. “I think it became more about protecting and preserving the search monopoly,” he said on the podcast.
That slowed their AI advancement substantially, added Rob Enderle, president and principal analyst at the Enderle Group, an advisory services firm in Bend, Ore. “Up until that time, they were in a leadership position, then lost it with the refocus,” he told TechNewsWorld.
Tech Companies Surprised
Google wasn’t the only tech company surprised by the wild popularity of ChatGPT, but it did have more to lose from the development, noted Ross Rubin, principal analyst at Reticle Research, a consumer technology advisory firm in New York City. “Many of the other big tech companies were caught by surprise by ChatGPT, in terms of the popularity and how it would resonate with the broad population,” he told TechNewsWorld.
“But where such a high percentage of Google’s business is driven by search and advertising revenue, it’s more important for them than for Apple or Amazon that they be able to harness generative AI in a way that either protects or expands its search business,” he said.
“With Amazon, Alexa has never been a revenue driver,” he continued. “It is the face or voice of the company in many contexts. But clearly, Amazon drives much more revenue from AWS and the retail business.”
“In a similar way, Azure and Windows licensing are much, much bigger revenue streams for Microsoft than search,” he added.
Buchheit pointed out that Google had good reason to worry about AI caving in its search goldmine. AI is an inherently disruptive technology because if you actually give people the right answer, they won’t need to click on an entire page full of ads, he explained.
Google has been aware of that tension between profitability and giving the right answers as far back as 1998, he continued. “There’s always a temptation that if you make your results worse, people will click on more ads,” he said. “AI has the potential to disrupt that.”
Perils of Good Search Results
“There’s no question that Google remains one of the leaders in AI, but it is true that their focus on revenue and profitability may have hurt their capacity to innovate, as they pressure their AI teams to productize and monetize the technology,” observed Greg Sterling, co-founder of Near Media, a news, commentary, and analysis website.
He maintained that Google’s focus on revenue growth has already hurt the experience of search users. “And it’s possible that their removal or reduction of AI overview and search is tied to a negative impact on ad clicks,” he told TechNewsWorld.
In July, Search Engine Land, citing an analysis by enterprise SEO platform BrightEdge, reported a drop in AI overviews in Google searches from 11% to 7% during June.
“By prioritizing search, Google might have slowed its AI advancements compared to competitors who aggressively pushed AI boundaries, like OpenAI and Microsoft,” said Mark N. Vena, president and principal analyst at SmartTech Research in Las Vegas.
“This strategic pivot likely allowed rivals to catch up or even surpass Google in AI research and applications, particularly in generative models and other cutting-edge AI technologies, potentially weakening Google’s leadership in the AI field over time,” he told TechNewsWorld.
AI Ad Impact Exaggerated?
While there’s a risk that if search results are too good, ad clicks could be reduced, that risk may be exaggerated. “I don’t think generative AI steals much from the ad business,” said Michael Hodel, director of equity research for the media and telecom sector at Morningstar Research Services in Chicago.
“The types of searches that generate ad revenue are those where there isn’t a single answer and where advertisers hope to influence which route the user takes — like, ‘what are some cool new shoes I might like?’“ he told TechNewsWorld. “The question is how ads will surface in a generative AI context?”
The answer to that question, he continued, lies in a comment by Alphabet CEO Sundar Pichai at the company’s second-quarter conference call. “[W]e are seeing that ads appearing either above or below AI overviews continue to provide valuable options for people to take action and connect with businesses,” Pichai said.
In addition to being concerned about the impact of generative AI on ad revenues, Buchheit maintained Google was worried about how the technology would play with regulators. AI had the potential to anger regulators because it would only be a matter of time before it said something offensive. “I think they were kind of terrified of that,” he said.
“So they were just extremely risk-averse,” he explained.
Slow Start but Formidable Player
If Page and Brin were still running the company, that risk aversion might have been overridden, he continued. “But it takes someone with that level of credibility to really bet the company or to say, ‘Yeah, we’re going to do this thing, and it’s going to cause a lot of problems.’” he said.
“But I think that if given the chance, Google never would have launched AI,” he contended. “The only reason they launched it is because OpenAI put out ChatGPT, and suddenly, it became a thing that they were forced to do.”
“And that also helped them because OpenAI took a lot of those bullets in terms of saying crazy and offensive things,” he added.
Despite a slow start, Vena asserted that Google is making significant strides in the AI arms race. “Leveraging its vast data resources and deep expertise in machine learning, Google has developed powerful AI technologies like Bard/Gemini and advancements in large language models like PaLM,” he said.
“While competitors like OpenAI and Microsoft initially gained attention,” he continued, “Google has recently accelerated its AI initiatives, integrating AI more deeply across its products, including search, cloud services, and consumer applications. This renewed focus, coupled with its strategic acquisitions and research, position Google as a formidable player in the rapidly evolving AI landscape.”
