> Can someone explain to me the rationale of investing in a product, marketing it, seeing that it drives consumers away from your product and erodes trust, and then you continue to invest at an accelerating rate?
Sure!
Google began investing heavily in AI (LLMs, actually) to catch up to the other frontier labs, which had already produced a product that was going to eviscerate Google Search (and therefore, Google ad revenue). They recognized this, and set about becoming a leader in the emerging field.
Is it not better to be a leader in the nascent industry that is poised to kill your profitability?
This is the same approach that Google took with smartphones. They saw Apple as a threat not because they had a product that was directly competing, but because they recognized that allowing Apple to monopolize mobile computing would put them in a position to take Google’s ad revenue — or allow them to extract rent in the form of payments to ensure Apple didn’t direct their users to a competing service. Android was not initially intended to be a revenue source, at least not most importantly. It was intended to limit the problem that Apple represented. Later, once Google had a large part of the market, they found ways to monetize the platform via both their ad network and an app store.
AI is no different. If Google does nothing, they lose. If they catch up and take the lead, they limit the size of the future threat and if all goes well, will be able to monetize their newfound market share down the road - but monetization is a problem for future Google. Today’s Google’s problem is getting the market share.
> frontier labs, which had already produced a product that was going to eviscerate Google Search (and therefore, Google ad revenue)
> If Google does nothing, they lose.
Is any of that actually true though? In retrospect, had google done nothing their search product would still work. Currently it's pretty profoundly broken, at least from a functional standpoint--no idea how that impacts revenue if at all. To me it seems like google in particular took the bait and went after a paper tiger, and in doing so damaged their product.
Even before recent "AI improvements" for us tech nerds Google search was broken ad invaded something. But for average Joe up until recently it's was still okay because it served purpose of whatever normal people use search for: find some rumors about their favorite celebs, find some car parts information or just "buy X".
Problem for Google is that for a good chunk of normal non-techy people LLM chats looks like talking to genius super intelligence and they was not burned by it yet. So they trust it.
And now good chunk of non-tech people now go and ask ChatGPT instead of using google search. And they do it simply because it's less enshittified than Google search.
I wonder is Google's AI investment a rational reaction to real competition or something else? My strong suspicion is that it's in fact delusional beliefs held by their management--something to do with "AGI"--that drives this activity, perhaps combined with the effects of information monoculture/social isolation/groupthink. It seems the simpler explanation that a very small group of people are behaving insanely than a very large number.
I'm honestly clueless about reasoning behind bigtech investment into AI. For me it's all just look like another seasonal fad like we had many of during last two decades. Everyone invests into AI because of FOMO.
I know the tech itself is real and people do use it. And it will certainly change the world. Yet I doubt even fraction of money burnt on it will ever be recuperated because race to the bottom.
But yeah - I'm just random tech guy who has not built a big successful company and honestly have very little clue how to make money this way.
> I'm just random tech guy who has not built a big successful company and honestly have very little clue how to make money this way.
Hey, me too :)
I’ve been at this for a couple of decades, though, and from what I’ve seen the key to building a “successful” company is to ride the wave of popular interest to get funding, build an effective team, and then (and only then) try to find a way to make it profitable enough to exit.
I do think “AI” (really, LLMs, and GPTs in particular) are going to have a transformative impact on a scale and at a rate we’ve never seen before - I just have zero confidence that I can accurately predict what it’s going to look like when the dust settles.
Users still googled before. Now they just move to chatbots. Regular people don't really notice the search degradation as much and enshittification helps Google, as revenues kept going up. Chatbots are an existential threat since they will add ads and that's where Google's ad revenue dies.
Did any users actually move to chatbots? By which I don't mean the 0.001% of tech nerds who buy chatgpt subscriptions, but in aggregate did a meaningful number of google searchers defect to chatgpt or
other llm services? I really doubt that. Data would be interesting but there's a credibility problem...
Yes. People do use them and they trust them, unfortunately.
Tech nerds know what ChatGPT is, they know llm limits somewhat and they know it's hallucinating. Normal people do not - for them is a magical all knowing oracle.
> People do use them and they trust them, unfortunately.
Yep, and it’s hard to communicate that to them. It’s hard to accurately describe even to someone familiar with the context.
I don’t think “trust” is the right word. Sitting here on 19 Nov 2025, I do in fact trust LLMs to reason. I don’t trust LLMs to be truthful.
If I ask for a fact, I always consider what I’d lose if that fact were wrong.
If I ask for reasoning, I provide the facts that I believe are required to make the decision. I then double-check that reasoning by inverting the prompt and comparing the output in the other direction. For more critical decisions, I make sure I use different models, from different providers, with completely separate context. If I’ve done all that, I think I can honestly say that I trust it.
These days, I would describe it as “I don’t trust AI to distinguish truth”
I don’t have data for it, and would love to dig it up at some point. My head is too deep in a problem at the moment to make space for it …but I did just add it to my task list via ChatGPT :)
Anecdotally, I believe they did.
My wife is decidedly not a tech nerd, but had her own ChatGPT subscription without my input before I switched us over to a business account.
My mother is 58, and a retired executive for a “traditional” Fortune 100 company. She’s competent with MS productivity tools and the software she used for work, but has little interest outside that. She also had her own ChatGPT subscription.
Both of them were using it for at least a large subset of what they’d previously used Google for.
Gemini, ChatGPT and probably all of the others have free tiers that can be used as an enhanced web search. And they're probably better in many regards, since they do the aggregation directly. Plus regular users don't really check sources, can't really verify the trustworthiness of a website, etc, so their results were always hit or miss.
As someone who deeply dislikes using chatbots for information there is a lot of stuff that is easily and reliably anwsered by GPT
You must know the limitations of the medium but searching for how much and at what temperature should i bake my broccoli is so fucking annoying to search on google
Google has the capital to spend, and this effort needn’t succeed to be worthwhile. My point is that the scope of the potential future risk more than justifies the expense.
> and in doing so damaged their product
Only in objective terms.
The overall size of the market Google is operating in hasn’t changed, and I’m not aware of anyone positioned to provide a better alternative. Even if we assume that Google Search has gotten worse as a result of this, their traditional competitors aren’t stealing marketshare. They’re all either worse than the current state of Search, are making the same bet, or both.
This is very revisionist. While they have been catching up quickly there was no master 4D chess strategy here. Google was incredibly late to this game - Sergey had to come back from retirement because most of the research team had a Sarah Connor complex and couldn’t ship. The saving grace is that AdWords picked up the tab again and founders shook the place up when it became clear the golden goose was being cooked.
> Sergey had to come back from retirement because most of the research team had a Sarah Connor complex and couldn’t ship.
What, you don't want to ship the Torment Nexus? You're fired! We must ship a Torment Nexus, we must maintain our market share even if it means our destruction!
This makes sense, but if the goal was to avoid business failure from disruption / losing customers, then why would the companies not be behaving in ways that maximize their customers? Intermediate value theorem applies here. There is no number of net negative customer base that can be spun in a good way. There is no path to recouping their lost customers. These fundamentals must be seen by the decision makers.
This has been how I've framed a lot of the expenditure despite lack of immediate substantial new revenues. Everyone including Google is driven to protecting current revenues from prospective disruption. But the vulnerability AI created for Google is to other companies worth positioning themselves to take advantage of if Google falls behind and loses chunks of marketshare.
Yeah, like imagine if the LLM's don't advance that much, the agentic stuff doesn't really take off etc.
Even in this conservative case, ChatGPT could seriously erode Google Search revenues. That alone would be a massive disruption and Google wants to ensure they end up as the Google in that scenario and not the Lycos, AltaVista, AskJeeves etc. etc.
But what Google is doing, is like what Firefox did when Chrome came out. Panicking.
Panicking, and therefore making horrible design and product choices.
Google has made their main search engine output utter and complete junk. It's just terrible. If they didn't have 'web' search, I'd never be able to use it.
In almost every search for the last month, normal search results in horrible matches. Switch to web? Bam! First result.
Not web? The same perfect result might be 3 or 4 pages deep. If that.
(I am comparing web results in both cases, and ignoring the also broken 80% of the pages of AI junk.)
In an attempt to compete, they're literally driving people to use ChatGPT for search in droves.
They could compete, and do so without this panicky disaster of a response.
I didn’t see the comment, but I assume they were accusing me of generating it.
For what it’s worth, I didn’t use AI at all for it. I just tend to sound like an LLM, likely because I have ADHD and grew up very rural (most of my vocabulary and grammar from reading).
I also tend to use a lot of parenthetical phrases, semi-colons, and lists. ¯\_(ツ)_/¯
Sure!
Google began investing heavily in AI (LLMs, actually) to catch up to the other frontier labs, which had already produced a product that was going to eviscerate Google Search (and therefore, Google ad revenue). They recognized this, and set about becoming a leader in the emerging field.
Is it not better to be a leader in the nascent industry that is poised to kill your profitability?
This is the same approach that Google took with smartphones. They saw Apple as a threat not because they had a product that was directly competing, but because they recognized that allowing Apple to monopolize mobile computing would put them in a position to take Google’s ad revenue — or allow them to extract rent in the form of payments to ensure Apple didn’t direct their users to a competing service. Android was not initially intended to be a revenue source, at least not most importantly. It was intended to limit the problem that Apple represented. Later, once Google had a large part of the market, they found ways to monetize the platform via both their ad network and an app store.
AI is no different. If Google does nothing, they lose. If they catch up and take the lead, they limit the size of the future threat and if all goes well, will be able to monetize their newfound market share down the road - but monetization is a problem for future Google. Today’s Google’s problem is getting the market share.