Weekly Business Insights from Top Ten Business Magazines | Week 306 | Strategy & Business Model Section | 2

Extractive summaries and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Week 306 | July 21-27 , 2023

Inside Google’s scramble to reinvent its $160 billion search business—and survive the A.I. revolution

Google is facing a classic innovators’ dilemma. Neither outcome sounds good.

By Jeremy Kahn | Fortune Magazine | July 25, 2023 

Listen to the Extractive Summary of the Article

Sundar Pichai, Google’s CEO, declared Google to be an “A.I.-first” company way back in 2016. Now A.I. is having a major moment—but a Google rival is grabbing all the attention. The November debut of ChatGPT caught Google off guard, setting off a frantic six months in which it scrambled to match the generative A.I. offerings being rolled out by ChatGPT creator OpenAI and its partner and backer, Microsoft.

Here, at the company’s huge annual I/O developer conference in May, Pichai wants to show off what Google built in those six months. But many in the audience and watching from around the world on a livestream want to hear about: What’s the plan for Search? Search, after all, is Google’s first and foremost product, driving more than $160 billion in revenue last year—about 60% of Alphabet’s total. Now that A.I. chatbots can deliver information from across the internet, not as a list of links but in conversational prose, what happens to this profit machine? 

The CEO barely flicks at the issue at the top of his keynote. And leaves it to Cathy Edwards, Google’s vice president of Search, to explain what the company calls, awkwardly, “search generative experience,” or SGE. A combination of search and generative A.I., it returns a single, summarized “snapshot” answer to a user’s search, along with links to websites that corroborate it. Users can ask follow-up questions, much as they would with a chatbot. It’s a potentially impressive answer generator. But will it generate revenue? That question is at the heart of Google’s innovator’s dilemma. 

SGE’s arrival is an indication of just how quickly Google has bounced back in the A.I. arms race. But it also exposes Alphabet’s vulnerability in this moment of profound change. Chatbot-style information gathering threatens to cannibalize Google’s traditional Search and its incredibly lucrative advertising-driven business model. 

Google has the tools to be great at A.I.; what it doesn’t have, yet, is a strategy that comes anywhere near matching the ad revenue that turned Alphabet into the world’s 17th-biggest company. How Google plays this transition will determine whether it will survive, as both a verb and a company, well into the next decade.

3 key takeaways from the article

1. Sundar Pichai, Google CEO,  declared Google to be an “A.I.-first” company way back in 2016. Now A.I. is having a major moment—but a Google rival is grabbing all the attention. 
2. Here, at the company’s huge annual I/O developer conference in May, Pichai wants to show off what Google built in the last six months.  But many in the audience and watching from around the world on a live stream want to hear about: What’s the plan for Search? Search, after all, is Google’s first and foremost product, driving more than $160 billion in revenue last year—about 60% of Alphabet’s total.
3. Google has the tools to be great at A.I.; what it doesn’t have, yet, is a strategy that comes anywhere near matching the ad revenue that turned Alphabet into the world’s 17th-biggest company. How Google plays this transition will determine whether it will survive, as both a verb and a company, well into the next decade.

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Topics:  Technology, Search, Artificial Intelligence, Strategy, Business Model