AI has already killed their search biz. No one even clicks on results anymore. How many ads are they clicking on these days?
Fine, but how much revenue can be derived from this? I'd posit not much so long as Google sticks with CPC pricing.
AI results are their own citation- and context-free reality.
If Pepsi pays Google $100M for every statistical +10% they give recommendations of Pepsi over Coke in Gemini... how would anyone ever know?
Google hasn't done that obviously yet, because they have the cash to weather the choppy PR waters around public AI perception, but once AI is normalized it's going to be trivial to turn the knob on managed models.
Especially free ones, served cost efficiently by Google's infra backend, pushed via the most widely used phone OS and browser in the world.
The monetization (and user profiling) opportunities make web tracking and ads look like kids' toys.
You have a nice slogan, but doesn’t hold up
We could have made the same statement about landline telephones or cable television in the past.
E.g., if Google doesn’t invest in AI then AI will kill their search engine business. A lot of us don’t love the Google search AI Overview but now they’re competing directly with ChatGPT, and they’re essentially not a search monopoly anymore.
One way to look at a bust AI investment is the destroyed value of the stock like you mentioned, but perhaps that’s somewhat hindsight-biased? Perhaps the reality for some companies is that if they sit on their hands and do nothing they lose 40% of their company value and if they spend a ton of money on AI they lose 20% of their company value. Of course we don’t know the outcome yet.