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Comment by storus | Hacker News Reader

Winning the AI race means obsoleting their current profitable business. They might win but at what cost?

I actually love this. They think they'll be able to control this tech and be lords over everyone. In the meantime everyone is replacing them with homegrown solutions.

It's not at all how things are going / went.

Two years ago everybody was explaining that Google was done, that because of AI search was dead and that they were the IBM or the 2020s for they were absolutely nowhere went it came to AI.

Now we're at a point where a little flash model from Google is SOTA on half of the benchmarks:

https://storage.googleapis.com/gweb-uniblog-publish-prod/ori...

So the tune changed: Google is now dead not because they'd be nowhere in AI but because they're too good (?) at AI?

So basically: whatever happens, this time for Google it's over right?

(not too clear why it's a 122 Kb .gif file as if the 90s called over dial-up modems while when the same in .webp would be less than half the size but I digress)

In the last year GOOG stock doubled, MSFT remained the same.

If you don't think AI will include sponsors/ads/etc once someone comes out on top, well, I might have a bridge to sell you.

Seriously though, I'm not sure why Google evolving in this manner precludes them from having a profitable business model. Right now we're subsidizing the costs (probably just a bit) and having ongoing subscription revenue they can increase as needed (particularly in the "google won the race" scenario) will be key before they even have to consider layering advertising on top.

I think the difference this time is, anybody can curate a baseline set of training data, there is no need to constantly be scanning the open web and indexing it. Everyone already has "good enough" question-answering capability. There is no option to pay or an ad-free, trackerless search funciton on google, but I can do that with multiple non-google providers. Between LLM and kagi I've managed to largely cut google out of my life for $40/mo. Subsidized LLM will eventually disappear, but I think cost per token will reduce over time to meet the ~$20/mo ad-free tier.

advertising is ~76% of Alphabet revenue. Cloud is 12% and growing 30%+, but margins arent comparable yet — search basically prints money, cloud is still scaling to prove it.

And most of that ad revenue is google search.

But google search has subpar quality for many queries compared to ChatGPT and other AI providers. Even if they did fix the quality issue, nobody has yet got a good way to integrate paid ads within an LLM response.

I'd say those are 2 huge risks to their business.

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