This graph invites some pertinent questions. For instance, it suggests that their search revenue growth went linear sometime in 2020 and might be going asymptotic as of the last year. So I want to know what happens there over the next several quarters. Is the current quarter anomalous, or do deferred payments always make it look like that?
Second, is the geometric growth of Cloud cannibalizing their search teams, leading to less effort being put into sales. And so it’s not so much that demand is tapering off as that supply is being constrained as an opportunity cost. That $1m in salary nets more profit from Cloud than from Search.
As a power user of Google search for decades, I find myself using it less and less (maybe now 5% of my historical peak usage). There are several reasons, but the main one is because they have gradually traded search quality for ad revenue with the direct consequence being wasting my time.
If I type in the name of a company so that I can navigate to their website, and I have to scroll past my whole viewport of other companies bidding to be placed above where I'm trying to go, I learn it's faster for me to just type the website address into the bar instead of going via Google.
They designed a UX that made my life easier and caused me to form a habit, and then broke that UX for money causing me to form a new habit.
It's just one example of dozens, but the consequence is that I see 95% fewer Google ads than I used to. My guess I am on the leading edge (along with many others on this forum) of a wave of change of user behavior that spells pessimism for Google search revenue.
It is unfortunate and only sometimes sustainable to alienate a third of your user base to extract 2x as much money from the rest for a net 30% increase in short term revenue. It’s not repeatable usually.
I'd assume Google leadership weren't unintelligent, looked at the trends, and decided maximizing search revenue per user was more advantageous than search quality.
E.g. how Amazon knows they have a problem with counterfeits and low-quality copies that damages their brand, but chose volume over quality
Neither company will ever explicitly put it in those terms, but it seems obvious Google isn't looking at search as a growth engine anymore.
It’s not a judgement of intellect but of character. Those people were forced out of Google when the advertising/boiler room mentality took over.
Amazon kind of does say it but they were clever about it. They don’t let rhetoric win only raw numbers. That means they will always shill or scam for profit. Has been that way for decades but only now are people paying attention.
> I learn it's faster for me to just type the website address into the bar instead of going via Google.
It pretty much always was, assuming you type reasonably well anyway. Especially once browsers just started guessing at what you want by automatically adding "https://" and ".com" to whatever you type into an address bar and trying that before redirecting you to a search engine.
Yes, to an extent. There were three unfavorable circumstances other than AI eating into search: FX (major), the World Cup timing, end of de minimis exemption in EU.
That’s almost always a delayed effect. Move software people around and the revenue effects aren’t instant. In a heavily R&D-oriented area it might be 2y or more.
However customers often take a while to adapt to changing conditions.
If for instance you enshittify a tool brand, first the supply chain needs to drain of old inventory and then customers need to be confronted with the new product before they react, and that may take several interactions.
Ok this case that doesn’t describe people using search but does describe a monthly or quarterly ad spend. Once the feature factory shuts down it takes a bit to notice the new trend.
Well not that surprising given that the results are now 80% ads.
The real trick is that they're pretty much the only relevant ads on the entire internet. That and they pretty much force companies into paying so that people that search specifically for that company actually see that company as the first result.
Might be useful to scale yearly revenue percentage points relative to graph start year, so f.ex. 2023 percentages sum to (total revenue 2023) / (starting total revenue).
Would give a better sense of left-to-right momentum over time when the entire pie is growing.
The growth doesn't need to be from Search. Even with the current level of search growth, Google's total revenue is up 25% year on year, operating income is up 30% year on year.
You are wrong. Search is already profitable. It doesn't need to become more profitable. The profits can simply be used to improve the profitability of other offerings like Google Cloud.
That’s not the way Wallstreet thinks. They insist on continuing growth, year over year. Accelerating growth, even.
If you don’t show growth every year, then your stock tanks because you can’t show them the profit that they would make through buying your stock today and then selling it next year.
Yes and... parent was making the aggregate conglomerate profitability growth case instead of the single-product one.
Wall Street generally cares about the former more, unless the single-product is only-product.
In this case, that's the fundamental question about Google: is it only an ad company (in which case those numbers are the only ones that matter) or more (in which case total corporate revenue is more important)?
For Wall Street, I think they feel like Google/Alphabet is just an advertising company.
Everything else is an also-ran, and doesn’t materially affect anything, unless it costs a huge amount and doesn’t provide a suitable ROI. And here, AI and mega data centers would definitely be a problem — way too much capex, not nearly enough ROI.
Both "search" and "everything else" are primarily advertising revenue[1], and advertising spend is always heavier in Q4 because of (Black Friday and) Christmas.
[1]: As the page says,
- "Search" means "ads on Google Search and on other Google properties such as Gmail, Maps and Google Play"
- "Everything else" means "YouTube ads, subscriptions and devices, Google Network and Other Bets".
The story goes that Black Friday was named that because it was the break-over point between where most companies were in the red versus when they turned the corner and were now in the black.
At Whole Foods eStore, during the time I worked there, virtually all of their profit came from Thanksgiving. Not before, not after. Just that one week. Christmas was also something of a bump, but the rest of the year operated at a loss.
GCP got really, really good in the last few years. The cross-account story is now better on GCP than on AWS. BigQuery, Spanner, Pub/Sub, GKE are all best-in-class. AWS has its advantages too: CloudFront, Lambda, S3, DynamoDB, and IPv6 support are all best-in-class. It really just depends on what your product's actual architectural needs are, and whether you have access to nosebleed budget to pay for it all (these services are all staggeringly expensive).
“Recently”?? Have people not seen the findings of the AdTech Antitrust lawsuit they lost? Y’all should google it (heheh) especially the ad auction rigging parts of it, including Project Bernanke.
What they’re doing now is just being a lot more overt about it, because they want to carve up their old cash cow to feed their AI ambitions before ChatGPT and Claude eat it up first.
They can't juice, because advertisers are now good in calculating conversion rate, roas, cpa, etc, so they would shift budgets to other channels like overnight if see Google underperforming.
There's a reason why GSP (Generalized Second Price) auctions are called "truthful auctions", and that's because they elicit the true value as the bid from the advertiser (in theory).
So (in theory) advertisers will lower their bids if they're not getting the desired value from the clicks; and over time some will migrate budgets to other channels (like "influencers"? shudder ...).
I don't think so. First price auctions are not truthful, and advertisers hate them. But there are 50 shades of gray between a second price auction and a first price auction.... if you get my drift.
Of course the big spenders on Google with the multi-million dollars advertising budgets won't just change their spending behaviour over night. That takes time - like anything in big corporations.
Sort of. It really does depend on the company and how they're set up. Like, brands using agencies or more non DR advertising only update on marketing mix models which are much slower.
what channel actually provides most of these ad buys that would satisfy their ad dollars?
Google has been sued for being a monopoly, and it's not because they're just really good. It's because there's basically no other market that hits any of the dollar costs.
Ad tech started it's migration to first party auctions before 2020 including Google. This is old news in ad tech. Not sure about the correlations the X poster is making.
I (and a non trivial number of people I knok) have switched to Kagi for search just to avoid having to deal with the bullshit that is the above the fold google search results.
Course, they win anyway because I also pay for youtube premium to avoid seeing ads..
Feels like the world is becoming a split between people who can afford not to be the product and people who cannot.
People take the ad supported internet for granted, and genuinely believe that if we could just put companies in their place, we could have an ad-free internet that is totally free to use.
Wow, that X post is the most succinct but persuasive and damning thing I've read about Google's ad business developments in years (I don't watch it particularly closely.) Thanks!
Don't take it at face value. There is a serious rebuttal but I cannot find it now (post is from previous quarter). Anyway, he's twisting facts to fit the narrative.
Fascinating read, thanks! The counterpoint to "slaughtering the golden goose" is: If you're all in with AI, this is the rational thing to do, no?
If AI takes over, search becomes irrelevant, so better extract as much value from search as possible while it's decaying and not dead yet.
Gotta love seeing the complaint calling out "exact match (close variant)". Google sure does love text embeddings because it massively increases the keyword-search matches for auctions. After all these years, they definitely have no intention of fixing it for the advertisers.
> Search volumes are declining as legacy search is being increasingly cannibalized by non-monetized LLM queries
Second sentence is empirically a complete lie.
Search volume is still growing, despite analysts asking on every call what Google is going to do about falling volume, and Google continuing to re-iterate: Search volume is still growing, as are clicks on ads.
I get it that everyone hates paying as much for clicks as they do now. You can hate it all you want. You can claim Google is lying about search volume and ads, but that would be massive securities fraud...
Haters gonna hate. It doesn't mean the king is dead.
Random anecdotes like this don't equate to "company juicing their numbers". You need much stronger evidence than that to make such an assertion. There are legal and financial ramifications for lying, companies are audited, there are official forms and documents that public companies must file. Of course a company can lie on those forms, but in the case of a company like Google you need extraordinary, factual evidence to make claims like "they've been juicing their numbers".
You basically have to say, everyone from the CEO/CFO, to the auditors, the financial analysts, the legal team, and all the way down are all lying and this random guy on Twitter is telling the truth. Sorry, not buying it.
See the replies to that tweet. I agree, one swallow does not a spring make; but here there's a pattern. Ask anybody who does search advertising, and you'll hear the same story too many times for it to just be a coincidence.
Most people don't know this, but the Search Advertising auction is a black box. The advertiser just specifies a bid (the maximum they're willing to pay for a click); and the search engine promises that they will not pay more than that.
Here's a trick that Search Engines may (or may not, I plead the Fifth) use: the price an advertiser "i" who bid "bid_i" pays is bid_(i+1) * pctr_(i+1) / pctr_i where "pctr_(i+1)" is the predicted probability of click (pCTR) on the next lower ad; "pctr_i" is the predicted probability of click on the current ad.
Guess who calculates the pCTR? The Engine! In theory, if their pCTR calculations were 100% accurate, all advertisers would pay the minimum bid (which is typically $0.01)! Clearly, this is not desirable. So Engines juice the revenue by tweaking these pCTR values. Talk to anybody who works on auction mechanisms at a search engine, and you'll hear stories of how they tweaked these pCTR values.
In this context it's being used as tantamount to lying. "Juicing the numbers" implies that something is being misrepresented which is a form of lying.
Yes I read the post (please refer to HN guidelines on asking if people read something) and didn't find anything worthwhile there which is why I mentioned what I did.
Posting here for others asking about lying/juicing since I'm rate limited.
~~~~~
Lying on financial statements is in fact illegal. Juicing implies that some number is being misrepresented as higher than it otherwise would be which is a form of lying and thus would be illegal.
Obviously there are some gray areas - "we changed how we measure this" or something along those lines can be considered "juicing" or just a matter of changing a calculation to make more sense, but the broad accusation is extraordinary and requires much more evidence than some random person on Twitter saying some things. As an investor in Google (individually and through ETFs) it has no bearing on any investment thesis I have because I don't care what random nobodies on the Internet say and neither should you.
Their earnings missed by almost 30%, which is pretty huge in the stock market.
I think the bigger concern is that earnings misses are very rare for GOOG, and historically they've been able to hit almost any target that Wall Street expects. Their past earnings misses were all related to major macroeconomic events (2020Q1, which was the COVID shutdowns, 2022 all year with inflation from COVID/Ukraine + rate hikes, and 2019Q3 with the taper tantrum from Fed rate hikes), and most of them were more in the 5% range. A 30% miss, particularly with slowing revenue growth in their core business despite almost full monetization of commercial queries, could indicate that the golden goose is disintegrating.
For that matter, GOOG has been extremely correlated with macroeconomic indicators since about 2018, which means investors in the rest of the stock market should probably watch out. It's likely we're already in recession but don't know it.
> Their earnings missed by almost 30%, which is pretty huge in the stock market.
It's somewhat fake, as fake as last quarter's huge beat. It's basically due to their large share in SpaceX, which they have to mark to market at the end of the quarter. Anyway, that's not at all the reason for the freakout.
OI isn’t more “actual” than EPS. I remember back when Yahoo traded for less than cash and liquids [1] because investors didn’t trust management not to blow it on stupid shit.
Yes. But framing one as “actual” implies it conveys broad, ground truths better than the other metrics. It does not. The ground-truth metrics would be forward ROA and ROIC.
> The ground-truth metrics would be forward ROA and ROIC.
that's not ground truth in environment when landscape (AI) dramatically changes every quarter, and investments are uncertain bets with huge win potential.
Your ground truth metrics are: 1. How healthy core business: operating income. 2. How aggressively company reinvest: net - operating income.
Its just interesting how wall street views ant and google as the same caliber companies, even google has way more stronger baseline and ant is way more under the water.
A few days ago a Google found me something I was searching for, but via ads and not search. In the middle of searching raw part numbers, the ad became 100% relevant. It was a weird experience clicking on the ad; something I never ever do. So maybe this is a bit of good news? Yardinflatables.com if you're curious.
That’s wild. It’s possible that Google shows me relevant ads. But if it’s formatted anything like a sponsored result, I think my eyes just skip past it. Like after so many years I just have ad block built in to my retinas.
I wonder if one was actually useful, maybe I’d notice it?
We easily adapt and block out stuff we don't want to see.
In big cities we do this automatically - we don't even notice the dirt, parked cars, litter, people.. unless we consciously focus on them. I guess it is the same with ads, they lose their power as we adapt to them.
The solution is to force ads upon you and hope that you accidentally click on one due to sensory overload.
Or more ads.
Yeah Banner Blindness is definitely a thing, it's something to keep in mind with UI design where you can end up making something so in your face that the user just ignores it even harder. https://en.wikipedia.org/wiki/Banner_blindness
Competitors on Apple's App store can pay to show up when consumers search for the app they're after. To counter-act this, some apps will pay to have their app show up, as an ad, after you search explicitly for them
Meaning that, due to and capitalist incentives and double-dipping from tech companies, what you're searching for may actually be what's advertised
Oh yeah. I recently started with engaging with a vendor that has good SEO and I would just instinctively skip past their search result because it was one of those expanded ones.
When we created battle.net at Blizzard for Diablo, there was a bug where the game would launch in full-screen mode and hang, and the only way to escape back to the Win95 desktop was to click the ad displayed by battle.net.
We weren’t aware of this.
The ad company we used notified us of this issue and gave us three days to fix it. Afterwards our click-through rate went from something like 3% to .25%.
Many of those "accidents" are not really accidents: I've seen two kinds of ways sites engineer those "accidents"
(1) many sites, like phys.org, have crowded and confusing layouts that try to trick you on clicking on an "x" or something to close an ad but really clicking on the ad, there's a lot of deniability on this on mobile where the touch accuracy is poor
(2) a few years back there were a lot of sites which seemed to always change the layout when you were trying to click on something in the sidebar, anandtech was one of the worst, i could swear they were watching the mouse events and predicting the click events. this stopped all of a sudden, could be Google put the smack-down on this behavior
Ah okay, I had misunderstood you as referring to like, bot farms or something, not developers going out of their way to make it easier for people to accidentally click
I've long suspected Amazon's search is so crappy because it makes their ads necessary to actually surface a product. I guess Google got the idea as well.
The worst part is I've seen search other video sites that used to surface exact titles stop working around the same time. I'm not sure how to reliably find things I know are there anymore.
I've had so much greater success using the built-in AI ("Alexa for search") that I no longer use the regular search except briefly. I imagine it will be destroyed eventually as regular search was, but for now it's dramatically better.
>> I've long suspected Amazon's search is so crappy because it makes their ads necessary to actually surface a product.
I thought it was just because they were forcing third tier Chinese knockoffs for everything I searched for. After a few months, I gave up completely. I now look for product reviews on YT, THEN go back to Amazon and search for exactly what I'm looking for. Even then? The search results are still jammed with cheap knockoffs.
I’ve had this exact experience a couple of times in the past few weeks. Their “sponsored” ads of a kind of product that I was looking for (based mainly on description for the use I was intending) gave better results than any AI model I tried to use to find a product that fit my specific use case.
Found it interesting that I’ve flipped my search tool usage in such a short time. I use models for most “searching” but then utilize Google Search as the last resort.
Google successfully trained this human to click on ads.
Thankfully I never see any ads - ublock origin kills these
off. That includes the horrible UI choices Google made on
its search interface. A custom ublock origin rule filters
away the pointless "others also searched for pink cats"
while I was searching for epic skyscrapers. Evidently Google
tries to link-lose me here, wasting my time.
This is exactly what the ad network is meant to do, and their ability to monetize this ability means competitor's ads (like meta) become less valuable.
Is this how we fix google search? Make advertisers have to provide ads that are actually helpful search results, sort of like https://xkcd.com/810/ but for search ads
Pre-AI, we used to spend upwards of $60K a year on Google Ads to keep our inbound pipeline running.
In the post-AI world, that spend dropped to $0. Not because Google Search suddenly stopped working, but because our segment (low-code platforms) was one of those that AI was going to disrupt significantly. We had to rethink and adapt our offering to the AI world before doubling down on marketing.
Now that we’ve repositioned and adapted our product, our marketing team has started experimenting with OpenAI as a channel, but we haven’t switched Google Ads back on.
There’s also something I find interesting about this shift. Google Ads always felt a bit like a mafia tax. When we stopped paying, our organic traffic seemed to take a disproportionate hit too. We could never quite figure out why. Maybe it was coincidence, maybe something else, but it left us questioning how independent organic search traffic really was from paid search.
Today open AI is serving ads to App free users post their queries. If the ad is relevant and adjacent to the query then it does show the ad in the chat. It isn’t clear how relevant ads are and users behaviour on this yet but worth experimenting to learn.
Blaming AI is correct but perhaps not the way you think. I think a lot of people actually use other people's AI tools to do their searches now. Google's attempt to grab that back via their own AI tools is so far not really working. Google is no longer the go to tool for answering questions or doing research.
I used perplexity for some time. These days, I have claude and chatgpt. They search on my behalf. Sometimes I still do a Google search but I mostly just use it if I want to open a website that I don't remember the url of.
If I have a really straightforward question and I want a fast answer I’ll sometimes Google search for the AI overview. But it’s so unreliable. I use opus 5.5 for any question that Google could plausibly screw up. This is a huge product failure on Google’s part, IMO. I’m a $20/paid user for both Gemini and Claude. It’s nuts that with Google’s massive head-start in AI (and apparently they still are capable of making a frontier model), they somehow deliver such a crappy version of AI by default in their flagship product. Google is probably in some part responsible for the public’s distaste for AI.
Google is just scared. Google has been scared since November 30, 2022.
Text search is fundamentally a deterministic problem, and squeezing it through a heavy non-deterministic, stochastic engine -- especially through a CoT LLM -- is inefficient from a first-principles algorithm design pov. Also, Google did great search before AI overviews using probabilistic linking and knowledge graphs.
I've been using DuckDuckGo's NoAI version as a fallback, and I've had great results so far; brings me back to the web I remembered growing up -- personal blogs, random forum discussions, and whatnot -- with just a fraction of the page bloat.
I say all this as a HUGE fan of Gemini, Gemma, and Antigravity.
not really... search was great in 2008 or 2014, but not in 2022. seo spammers won by then, and their writing was even worse than opus 5.
I remember that the sites google shown before were sites you could get lost in. often they were communities. often they were sites actually written by an enthusiast of a subject.
these sites died. I wonder whether google was the victim or the culprit. the death of these sites did end up making their product worse. however, any site that actually hooked you meant less ad revenue for google. google wants you to come back from the result, since that's a second chance for you to click the ad. a result you come back from however is inherently a bad result.
You don't want Google to be a direct keyword search. Well maybe sometimes you do, but not usually. Text search is not fundamental to the Google user experience - DWIM (do what I mean) is fundamental. The ideal user experience is that you type in what you want and the machine finds it or does it. LLMs designed and deployed properly are infinitely better at this than keyword search engines are, despite being less predictable.
Example search: video card game with the robot guy
AI overview [correct]: The video card game you are thinking of is likely Inscryption, which features a mysterious, robotic-looking or masked scrybe (like P03, the robot scrybe of technology)
That's not what I meant at all. I understand no one would want 1:1 text search, and part of the reason why Google won in the 90s was because of PageRank. All I was saying was that basing a 'search engine' on a CoT LLM is very inefficient.
>LLMs designed and deployed properly are infinitely better at this than keyword search engines are, despite being less predictable.
In what way? How are LLMs more efficient and 'infinitely' better at this than what Google had before AI overviews? If anything, I find that search results have gotten worse.
That’s not what they’re doing either though. If I’m correctly informed, they are still running bog-standard Google searches under the hood and letting the LLM find the relevant stuff in them. It’s a bit of a godsend not having to do it yourself since the original results’ quality tanked so much. And kinda elegant from an algorithmic perspective actually.
It’s still not as good as actually searching the web semantically as I used to often find myself wanting to get rid of results that sounded vaguely like my search term but actually completely missed the point, but it makes it somewhat bearable again.
Text search is, but normal people dont want text search. Normies want to concierge fetch them perfect answer on first try. LLMs are really good at convincing you they just did that.
Yes, I'm aware. I meant that deteministic systems should be at the core (PageRank was deterministic), alongside other contextual clues and knowledge graphs -- things Google did before this AI overview crap.
What pisses me off is that you can't turn it off. Like, fine, you may bury and dark pattern the crap out of the disable toggle, but at least give users the choice to opt-out. And no, UDM=14 is not a toggle.
> I've been using DuckDuckGo's NoAI version as a fallback, and I've had great results so far; brings me back to the web I remembered growing up -- personal blogs, random forum discussions, and whatnot -- with just a fraction of the page bloat.
Honestly I don't believe you, despite the desire to. IME, DDG results are even worse than Google's; I've had queries that returned enough AI generated blog spam (and I mean utterly worthless borderline nonsensical drivel) to fill the entire first page of results. Not one organic result.
Is it really devastation? It's not like Search shrinked, it's that everything else grew so much. Yes, the landscape is shifting, but Google now has multiple legs to stand on, which should be a good sign to investors.
Around 2005, Google published MapReduce, THE parallel data processing paradigm. The ecosystem from Yahoo, Hortonworks etc overshadowed Google with Hadoop, Spark etc. Google then launched both paper and product when it came to cloud scheduling and transformers.
Search revenue isn't down, both search revenue and overall Google revenue are up, it's just that search is a smaller portion of the total pie because Google Cloud is climbing faster.
Lol devastation. Google Search is up 12% YoY, but since Google Cloud is up 102% YoY it took more percentage of the total revenue. Yeah this definitely look devastation.
am i remembering correctly that "google cloud" in the earnings isn't just developer's google cloud bills (that's google cloud platform), it's also basically any product where a consumer or enterprise pays money to google for anything other than advertising - google drive storage, gemini pro, enterprise google workspace plans...
Not quite. Google Cloud is GCP, Workspace and Gemini Enterprise. Consumer products subscriptions like Youtube premium, Google storage and even Gemini (consumer) fall under "Google subscriptions", which is part of Google Services
> basically any product where a consumer or enterprise pays money to google for anything other than advertising
Not exactly - the consumer stuff (subscriptions and devices) falls under services, while cloud covers GCP, Workspace, and enterprise-specific cloud services (like maps etc).
Basically if you pay for it with a monthly sub on a personal google account (including Gemini stuff like Ai pro) it's services.
Others want to nitpick but generally yes, before we had AI, the last craze was cloud, so they shuffled things around to the point that everything was "cloud". This is also how Oracle got to be the biggest "cloud" in the world!
I've tried to switch to Duck Duck Go unsuccessfully three times since its inception.
This time I have had no problem switching. I'm using Duck for 99% of anything I search for and it's just fine.
The 1% of the time, if I'm really stuck on something I try google shopping or images and its usually no better.
I realized quickly that google search was giving me a very distorted view in its search results, it is making a lot of specific editorial decisions that I wasn't quite aware of, or had lots awareness of over time.
Duck.ai is pretty good too. It's been nice to be able to finally switch, and it'll be interesting to see what happens with duckduckgo now that they can truly see some sustained growth (I can't be alone in this experience).
Google really had developed only 2 good products(not including acquisitions such as YouTube): search and gmail. Their primary cow to milk has been search. The rest (I.e cloud compute) is not really a moat.
I think we are facing a revolution/rotation where the these companies may start to become just “old businesses”(I.e IBM, AOL).
I don't really agree: it's pretty simplistic to boil Google's history down to two products developed 20 years ago.
I'm not really sure why you say that cloud compute isn't a moat. It's an enormous investment to compete there; there's a reason even large companies buy compute from GCP/Azure/AWS or even if they have their own compute don't attempt to compete. Additionally, GCP has been an enormously successful 'bet' for Google over the past decade.
Google has also turned subscription revenue for their various services into a major revenue stream; it'd be hard to call those various services (Google Drive, Google Play, etc.) anything other than successful.
Chrome doesn't generate revenue by itself, but it certainly drives advertising revenue across the rest of Google's portfolio and was developed in-house.
Finally, it's pretty strange to credit the success of YouTube as a revenue stream with a small loss-making company that was acquired in 2006 rather than Google, who has run it for the past 20 years.
Enterprises actively do not want Cloud provider's services distinguished by anything other than speed, cost, and reliability, because features imply lock-in. They'd rather have someone else's computer as bare-metal and run features atop that.
That's a recipe for racing to the bottom in the cloud space against the other providers, where the wins are very raw: what hardware did you predict two years ago you needed today, what breakthroughs in information structuring have your competitors not yet implemented in their own clouds, etc.
It's raw capitalistic competition, and that's good for consumers... But companies don't want that because it's a path to net-neutral revenue in the long-term, which is not how you put your stock on the moon.
The history of the cloud computing market belies your argument, in that the entire market has grown significantly since 2020, with all 3 big cloud providers >3xing their operating income (and 3-5x'ing their revenue) over that period. That isn't what you'd expect from undifferentiated, interchangeable commodities.
The scenario you've described sure sounds like the enterprise ideal, but it probably isn't the reality: in fact, some combination of high switching costs, feature differentiation, and/or price insensitivity means you have 3 highly profitable businesses.
If your business is tech and compute is a major cost of business, then sure, you want to avoid lock in.
But if your business is not tech, it makes a hell of lot of sense to pay a few bucks extra for a managed service like Cloud SQL to host your databases and let Google handle the security patches and backups etc, instead of hiring your own DBA to do it for you.
> GCP has been an enormously successful 'bet' for Google over the past decade.
I disagree on this. It's not clear how much money they are actually making and how much revenues are shifted over from other business lines to GCP because GCP earnings growth is / was valued higher than other business lines by the markets.
That's the big criticism on Microsoft, not Google. On GCP this isn't the case, because Google does not have a huge install base of MS Office to give "free" 50% Azure credits (but paying the same) faking their cloud numbers.
GCP has a reputation on being the fastest compute and network available. Also the most bang-for-your-buck (on hyperscalers) ML infrastructure by far (because TPUs)
Amazon is "the default" (and most expensive). Works with everything.
Azure is "Microsoft cloud". It's not fast, cheaper but certainly not cheap, ...
But of course that should be interpreted as GCP being 10x the cost of on-prem hardware (for equivalent storage/performance). Azure 13x or so. And Amazon a solid 20x (mostly because none of their products deliver the performance advertised and because if you buy 1 thing of Amazon, they bill you for 20 different things). Even with the price hikes a server under your desk (not the same, I know, however, once you have 20 servers in 2 rooms in 2 buildings and kubernetes running the workloads it is the same in reliability)
I mean, $11B in quarterly operating income ($33B in revenue) is clearly quite a lot. The only reasonable argument here is that this includes hardware sales (i.e. TPUs), but it is still a lot even if you subtract that. I think many folks internalized the narrative that GCP was an also-ran many years ago (when that was demonstrably true), but haven't updated their priors now that revenue is almost the same as (and may soon surpass) Azure's.
Google has spent $132 billion on capex this year. Most of that money is going to GCP. We have to think about the hundreds of billions being invested to contextualize the profit numbers. $40 bill a year is not enough to justify the capex they’re partaking in, GCP still needs to grow a lot to be successful.
I don't think it's correct to view AI capex as simply booking profit for Google Cloud - theoretically almost every aspect of Google's business should indirectly benefit from those investments. Bigger picture though, the bet behind that staggering capex is future profits, not current profits (see: OpenAI, Anthropic). Even if you think that's a stupid bet, the evidence won't be in 2026 income, it'll be in future income.
The vast majority of that money is going to AI. Some part of it is for internal consumption, some of it is for resale to GCP customers, but it is not some sort of loss making subsidy to prop up GCP.
GCP is a joke. Their sales reps are useless, and their customer support is non-existent. They are about 8% of the cloud computing marketshare as a result.
I hate Azure, but Microsoft is at least trying to sell it properly. You get a human you can talk to and their support is responsive (although it's also useless).
> Finally, it's pretty strange to credit the success of YouTube as a revenue stream with a small loss-making company that was acquired in 2006 rather than Google, who has run it for the past 20 years.
As a Youtube user, I don't really see any improvements in it (aside from technical ones) compared to 10 years ago.
> GCP is a joke. Their sales reps are useless, and their customer support is non-existent. They are about 8% of the cloud computing marketshare as a result.
This is an outdated or straight-up incorrect take. In the past quarter, Google Cloud's revenue was ~$30B, just shy of Azure (~$33B) and well shy of AWS (~$45B). That's about 28% of the cloud computing market excluding other players. Additionally, Google Cloud has grown a lot over the past few years and has been steadily eating away at AWS and Azure's market share; by next year it seems likely that it'll be bigger than Azure.
> As a Youtube user, I don't really see any improvements in it (aside from technical ones) compared to 10 years ago.
Sure, it's a website that serves videos (and ads); just because the fundamental proposition hasn't changed doesn't mean that Google hasn't done a hell of a lot of work into turning YouTube in a business that earns tens of billions of dollars a year.
Most of the improvements have been keeping it running in the face of being the place everyone stores and retrieves video, and that's a lot of invisible work (but is the real reason you don't really see working YouTube competitors; it's a technically challenging big-iron problem).
The knife in the back of Youtube competitors is that people ad-block because they don't like ads, not because they have some kind of moral compass. Youtube mostly tolerates ad-blocking, which pretty much cements it in place as the absolute best streaming service (no ads, no subscription, unlimited free consumption).
The result is that it's basically impossible to get off the ground to compete with yt, because early adopters are almost universally tech forward. And tech forward people don't pay for shit (except the 1-5% who do).
I’m sure with Chrome,
Google has smart people calculating the value of the data that they get from it. It doesn’t make money directly but it’s gotta be a huge money maker.
Chrome logs every site you visit with the mothership, and that is very valuable data to Google. That allows them to spot, in realtime, trending sites for example. They see what the users are doing on the Internet in realtime and act accordingly.
It’s 2026, I would absolutely say Google “Developed” Google Maps and Android even if they did not “create” it originally. At what point can we attribute the success of these products to Google as a developer instead of Google the buyer.
Android had a market share of 0, with no released products when they bought it. The 80%+ market share today was all Google.
Google Maps was purchased (pre Google IPO), but the original (“Where2”) was a desktop application. Google completed rebuilt it alongside the acquisition of other data sources, and released the web page. Years later, they built a mobile app which became one of the biggest apps of all time. Should we not attribute that success to Google instead of the Australian startup building a desktop app?
Look I'm Google's #1 hater but this is just goofy lol. There are multiple buildings full of Android developers, and have been for at least a decade; to say that it's not "made" by them is a huge stretch. Technically all of their products are just ripoffs of Sun & Xerox, right? Or Turing & Church, I suppose!
When YouTube was acquired by Google, it was already pretty similar in shape as a product to what it is now. The biggest differences are scale, the addition of advertising, and ancillary integration with other Google services. The first is a function of growth, the second is exactly what Google would be expected to do to monetize the service, and the third is another logical implication of "acquisition". (You could quibble and say they added vertical shorts and live video, but I don't think those are even fundamentally different from a product perspective from what YouTube was already doing in 2006, just fast-forwarded to adapt to the consumer technology we have today).
That's very different from Android, which was an unreleased prototype that had zero users and was dramatically different even from what ended up shipping as the first product, let alone what it is today. Android at acquisition would be unrecognizable from what the majority of people worldwide are typing on this very minute.
Yes certainly if you discount the 20 years of development, the creator tools, the advertiser tools, monetizing creators, live streaming, completely rewriting the whole thing, etc. Google didn't develop YouTube much.
> Yes certainly if you discount the 20 years of development, the creator tools, the advertiser tools, monetizing creators, live streaming, completely rewriting the whole thing, etc. Google didn't develop YouTube much.
Are you serious? Just the hardware build Google did for Youtube alone. They 1000x (not %, times) their backbone bandwidth and they're still increasing it. Youtube used to have 2 small datacenters where they were acquired. Now it's 20% or so of half of the total Google DCs.
> Are you serious? Just the hardware build Google did for Youtube alone. They 1000x (not %, times) their backbone bandwidth and they're still increasing it. Youtube used to have 2 small datacenters where they were acquired. Now it's 20% or so of half of the total Google DCs.
> That's nothing?
Either you replied to the wrong comment or you didn't read the comment you're replying to.
Not a moat and not big but... for SMEs "Google Workspace" is a godsend from outter space.
This is what allow little SMEs to not have to suffer that piece of shit that Windows is. I know people running their SMEs (and I helped them set up Google Workspace) from Mac and Chromebooks since years and years and who do not ever want to here again from anything Microsoft.
They're basically doing everything inside "Google Workspace" (formerly "G Suite", formerly "Google apps for domain" because Google's product naming is just confusing).
Gemini is also IMO excellent for everything that is not coding. It's really rare that I use Anthropic models (which I pay a subscription for) for anything else than coding.
GMail / Drive / Google Docs / Google Spreadsheets are great for a shitload of SMEs out there who want to give Windows and Office the middle finger.
> Gemini is also IMO excellent for everything that is not coding. It's really rare that I use Anthropic models (which I pay a subscription for) for anything else than coding.
I use Gemini Pro for every day stuff and Opus is much better than it. A lot more features and everything works better, especially in the websites. Gemini is just... dumber overall. I had a project/gem (now replaced by a skill) and sometimes I'd start with them and then veer of course along the way. Gemini would religiously follow the initial context, stupidly, while Opus realized that a good chunk if it wasn't needed anymore after my last prompt and did the right thing.
Why separate out products developed internally versus acquired and growth? There is an almost moralistic element in the tone of “well they just bought it”. Sure, they bought it and grew it into a behemoth, plus what really matters is not the provenance but how much money it makes for them. Plus, it’s reasonable to call YouTube (and instagram, which also gets the same treatment) two of the all time best corporate acquisitions. It’s not easy to buy a company and grow it like that.
It's absurd to say that Google did not develop YouTube. They acquired it at a point where it was a galaxy-scale cash incinerator and made it work economically using their superior platform.
They didn’t. They bought out another company. Did Meta create WhatsApp? and Snapchat? Everything else that Meta tried to stick their foot in has failed, but Muse seems to be promising. Both are very profitable ad companies. With a few me-too hardware products. Ads bring home the bacon.
I think it’s naive to assume the ad revenue would have came at the same pace naturally. At least not without completely pushing users away and ruining the product (nobody likes ads but YouTube ads aren’t the worst). Google having an ad business was a strategic asset for YouTube as a business
Youtube was full of pirate music videos. If Google (or some other heavyweight) didn't buy them, they probably would have been sued out of existence like Napster and etc.
When Google bought YouTube, it already had Google Video. Google saw that YouTube had market traction and pivoted quickly, to its (and YouTube's) credit.
I think the generally accepted ad load has been shown to be about 20%. About 20% of TV is ads, 20% of social media feeds, etc. Seems natural that we’d get there with YouTube.
YouTube has had sponsors and inline ads for years from the content creators, so I’m fairly confident we’re already approaching the saturation point in some form.
Difference is, TV had (has) content in 30 minute chunks. But Youtube has, among others, Shorts, which are often 30 seconds. But still Neal Mohan wants to show ads on Shorts.
On top of these ads, creators are inserting their own ads ("this video is sponsored by ...."), so it's ads all the way down (like turtles).
Before they acquired these, how were they doing? I'll give you a hint: they weren't exactly how we knew them today. Android was literally a concept and YouTube was bleeding money with no realistic path to profitability.
> Everything they make from within flops 99% of the time.
As do all inventions? Of course, you just don't hear about all the failings from individuals or smaller companies that went bust as a result. The important thing is the 1% that succeed are so successful it offsets the losses.
Google, Meta and Microsoft’s track record. Is not that good beyond their core in fact, they’re horrible when the playing field is level, Nadella right now seems to be the most vulnerable. It’s copilot or bust..
those geniuses that made acq. grow all have big retirement exit btw. Nobody in google worth low digit NW if they have been there for +10Y, so yeah they bet on their work and beat market for several years
That’s nonsense. What about Maps, Sheets, Android, Meet, Chrome, Cloud etc. I don’t even know how you can exclude YouTube. It’s basically something they’ve worked on for more than a decade at this point. The number of google products we all use on a daily basis is pretty stunning.
All Google loss leaders to service the ad company, Microsoft is also running into the same problem. Xbox, Blizzard games and Copilot are not profitable and to top it off. Between the two of them, they have spent upwards of $330 billion dollars in 2026 on AI models and AI CapEx. Microsoft laying off 60,000-70,000 people didn’t come out of thin air.
They’re something like 5% domestically, a little less if you include all budget devices, a little more if you only look at “premium” phones in its price category.
It’s likely made no impact on iphone sales, but I don’t think it’s a reasonable goal. Android and iPhone users don’t meaningfully switch, the goal would be to gain Android customers, and it seems, drive market direction. 5% of all US phones, which is 10% of android phones, doesn’t seem terrible considering they’re certainly spending a lot less than Samsung et al in R&D
Virtually nothing. Their processor is at least seven years behind the times. It’s not profitable. It’s just a Me-too loss leader to service the ad machine. 3D models and data-centers are built on top of that.
I don't think the question of "good products" is really relevant here; the important aspect is profitable products. And in that arena, nothing beats the money printer!
They used to have a second minimint in AdSense et. al. ("Display Advertising"), but that shrinks by the year economy-wide as the vicious cycle of data tracking, ad blocking, and paywall dodging continues. Now it's a mere $7B[1], compared to $11B for Youtube (technically also Display Advertising but it gets its own segment now, I guess) and $63B from the money printer proper.
[1] Actual report here: https://s206.q4cdn.com/479360582/files/doc_financials/2026/q... Interestingly, display revenues are slightly up! But still, in Google land, "slightly up" is potentially a scandalous failure. Perhaps they settled into better agreements with big publishers ("sell side") after it became clear that they wouldn't actually be punished for having a Display Ads monopoly, despite losing the antitrust case brought by Biden's DoJ.
Google has been extremely aggressive in growing its Cloud business in the last few years and has been offering big incentives to companies willing to switch from other providers. Looks like that's beginning to pay off as companies start to pay the unsubsidized bills.
I'd be curious how much Workspace contributes to Google's revenue. I don't see it broken out anywhere in the reporting. Assumedly it's part of the $30.7B cloud revenue.
I was just looking in the Workspace account of a relatively small local business, and realized they're spending ~$6k/yr on Workspace. Multiply that by however other small businesse are on Workspace, add in larger enterprise customers, and you're probably at a decent chunk of revenue.
I checked my Google search history. Compared to pre-AI era, my search volume reduced by 90%+ (from daily 200 searches to like 5).
And the AI response in the Google Search still has factual errors occasionally...
On the contrary, the ChatGPT has been doing great. The accuracy, recall, precision, or whatever metrics of ChatGPT exceeds Google Search by a large margin. Or close to or exceed what a human expert can do
So if I understand it, search numbers are down (because AI is doing what Sam Altman originally saw - AI is a better search engine)
And Google knows it, so why not squeeze the current customers, whatever model AI takes it’s unlikely to be a word matching auction, this model is dead, grab the cash and go.
I should have been more precise, it depends on what you mean by "search" -- traditional search is still a huge cash cow, but AI search is not as lucrative, which is what the exec called out in that Ars link. The problem is that AI search is rapidly replacing traditional search.
Personally I have doubts that AI search would ever be as lucrative as traditional search, which I expanded on in that comment I linked.
Schindler said, according to Ars’ source, that “each AI Mode query currently makes less than a traditional search,” coupling “that with the claim that monetization will improve over time” [1]. Ars speculated that the slowdown to double-digit growth is “driven by more consumers using AI chatbots to find answers.” But none of that says Google is losing its user base.
I use Kagi and am skeptical of the debt-fuelled AI build-out. But 12% growth amidst a strategic pivot is unabashed good news. The stock sank because of the capital expenditure, not this.
Right, I don't necessarily think Google will lose its userbase -- although ChatGPT and Claude and heck, even Muse, are formidable threats -- but I do think its ability to monetize each user will drop sharply as users shift to AI search.
Like, in the theorycrafting in my comment that I linked before, I didn't assume any change in userbase; just how lucrative (or not) each step in a chat-based journey could be versus a search-based one.
This is it exactly. Search is steady while GC is growing by leaps and bounds because all AI iniatives require cloud for hardware and GC is a good option for anyone unhappy with AWS or Azure. The graph makes it clear.
It doesn't /inherently/ return better search results, but Google is many years into an intensive project to make their search results so bad that even a magic eight ball, let alone a moderately advanced AI, can do better.
Google's organic search results are ranked by quality (including how many people click on them).
AI, generally thinks the best result is what's most common, or average, resulting in decent results, but not the best for what you're looking for.
We notice it when we're looking for a level of specificity google can hit, compared to an ai model. It's why Google's AI search can hit a bit differen too.
The example that comes to top of mind is a search that is not made for search rarely can compare to something as well as Perplexity.
> Google's organic search results are ranked by quality
What does this even mean? They're ranked by metrics that are assumed to be a proxy for quality, but (a) the accuracy of those proxies varies widely and (b) the ranks are relative; if a result is no longer in the response pool the fact that it would have been higher quality is invisible. Consider the year where anyone who's profile had been tagged as a software developer couldn't find any information on tost rings for sailplane towing because the "autocorrection" to toString was so strong that no mechanism besides logging out gave any relevant results; there's always crap like this going on.
When I'm looking for info that requires careful parsing of a source site, then LLM is faster. If it's something like looking up the hours of a business googling that local business is better imo. Result is fast you get to see the business picture etc
Search has moved on from tf.idf + pagerank at this point. And absolutely they do use things like encoders to produce embeddings that are used in retrieval.
Google ranked the best results, not the most commonly occurring ones.
AI is by default returning the highest statistical percentage of what it thinks you are looking for in a response, which may or may not be a search result.
A fun example is having the AI run a search, and comparing it to perplexity, or even gemini a little. OpenAI is improving, and Claude is pretty consistently not made for comprehensive search.
Search numbers are down because Google search has become crap.
I know a lot of people which I don't consider tech enthusiasts and they moved from Google to duckduckgo.
Anthropic uses and pays for Brave Search. OpenAI uses Bing(perhaps) and their own crawler.
There have always been alternative search engines. People still use Google plenty and its AI Overview has gotten a lot better. Probably plenty good for most people.
For me Google has stayed as the default interface, if I need to ask a basic query (probably searches that don't yield much revenue but keeps me on Google), the results were becoming worse a 1-3 years ago but now the AI parts of Google is now good-enough(TM) that I mostly don't need to go to a separate interface, as long as users aren't fleeing they can probably continue to get paid for ADs (also the if YT ads are included, those have really become obnoxious but probably well monetized).
Not more than accidentally or when actually interested in something that pops up, but as a friend said, I'm not a usual core customer so I've never been the baseline.
The thing they're doing correctly right now imho, is that AI mode is mostly toggled for things that passes a quick questions filter (probably low probability of a purchase, like "global illumination methods" giving a decent overview of the field) while if you just type green shoes it'll put out an assortment of online and local shopping options.
Now if as someone said in the sibling comments, Google is gouging their customers with the new auction model that's another problem, but if I was a shareholder I'd be less worried about an exodus of end users to OpenAI,etc than I was a year ago.
The money is mostly paid by companies wanting to find customers and the AI companies like OpenAi and Antropic don't provide much of that. The biggest competitor is probably Facebook who I'm not sure are really booming at the moment?
Ironically, Google is likely more dependent on the success of Anthropic and OAI than they are on the success of Gemini.
They have an all you can eat buffet of cash from those two sitting right in front of them, but they can't build DC's fast enough to capture it. If that buffet dries up, the damage would probably be much worse then Gemini becoming non-competitive.
No they are not, why would you think that, they are bundling Gemini in their suite and millions of professionals use it as it's already part of their Gmail, docs, etc.
Literally all my non tech friends are writing Gemini gems or using notebooklm, with a minority on copilot.
Google has what all its competitors want desperately right now: 2 decades of data. That's their moat and where they will extract the most value as they increasingly lean into AI search results.
OpenAI and Anthropic can catch up, but first they must invent Google search, Google Maps, Gmail, Google Calendar, Youtube and Android.
Title makes it sound like Search shrunk, but it's rather everything else grew drastically, especially Cloud. This diversification is generally a good sign, but investors still seem to panic.
Humans are unsettled by fast, drastic changes since it generally signals uncertainty ahead. It's a caveman instinct signaling that someone needs to do much more to find the new normal or navigate some hardship.
This article is missing the point. $GOOG didn't drop because search revenue is down. Search revenue, and revenue overall, actually grew. It dropped because the rate of growth is lower than expected, and the price of a stock is determined by how investors think the company will be worth a decade from now.
Makes me want to own the stock now that they are more diversified. I will never understand why they didn't want to own all of Waymo but did for pretty much everything else.
How would you expect search forecasts to be met if most of the time you get "are you a robot" or clanker summaries if you are lucky.
Search no longer works and you are killing your most important product with AI that nobody wants. If search worked like in 2010, no one would use AI answers.
what ball? they're spending 100% of cashflow, taking out debt, and issuing stock.
so they're not conservative on capital investment, they're growing at 103%.
You cant:
1) win the personal agent (requires a vm for every user)
2) win cloud sales (requires selling your compute)
3) win model war (requires using your compute)
4) win the chip war (requires selling your tpu's themselvs)
Weirdly enough their issue is they're to small to fight every battle, MSFT+Nvidia+Meta+Oai+oracle is like 14T in market cap.
The fact that this was ever more than half should make us extremely suspicious of the whole search engine. Almost all of that money is coming from paid manipulation of search results.
Retail is just a bad business. The ad business is many times more profitable than cloud business because of the margins. Cloud isn’t a money printer when compared to advertising.
What is even stranger, though, is ... the alternatives suck even more.
I don't know where to even start. Take qwant. Well, first check they
do is "are you a bot". That's wasting my time. I am not a bot. But,
while this may be a minor annoyance, qwant also yields crap results.
It does, however had, which is quite interesting, also yield results
that Google search does not yield. I had some good results here with
regards to images. But in general, searching the www for useful information,
really took a dive in the last 5-10 years. And a HUGE dive. Many people
noticed this. There are tons of webpages pointing this out. And videos
on youtube too (owned by Google, the monster that ruined its search
engine).
I am surprised google search still yields any money to Google, considering
how crap it has become. In the past I could even read webforum entries in
behind the "you must be logged in". I did this, for instance, on a text-based
MUD I retired from many years before that, but I was still curious what kind
of changes they made. Then google removed that feature - and many more -
deliberately. That was when Google decided to cripple its search engine.
Then came AI slop and slop-degraded the remaining rest. The nuclear slop
holocaust eradicating useful information. Thankfully Wikipedia still exists,
and while it has several issues, quality-wise it is a blessing compared to
what we typically see nowadays.
Gemini is terrible, it's trash especially after downgrading to the free version. I have to prompt it two to three times for it to understand what I am asking it. It seemed better when I was paying for it while it's free competitor models (the other 4) always answer me right away.
you're not really the ideal customer. They're probably going to market to enterprise people because Claude/ChatGPT will become too expensive when they IPO and won't have any other revenue stream unlike Google/MS.
There's nothing intrinsic about Google search that makes it a monopoly. Monopolies usually hold their position because regulations make it prohibitive for competitors to form or because they control a rare resource. Google search does neither of these two things. Its just a better product compared to everything else out there and the market reflects that.
Do they control the Trademark "Google"? Do they control the Domain Name "Google.com"?
Do they control the default Search engine for Android? For Chrome?
Did they pay to be the default Search engine on iPhone? On Firefox?
Are those rare resources? I'd say yes.
And you're conflating "illegally-maintained Monopoly" with "Monopoly." Whether they got there through using illegal tactics or not is a separate question from whether they are a Monopoly now. 90% - is that a high enough market share to qualify as a monopoly, when their annual revenue is like $224 billion? What percentage would be enough to convince you? Does it need to be 100%?
You forgot to exclude the "not usual" factors that allow monopolies to hold their position to rule Google out of the group.
For example, non-regulatory attempts at blocking of competitors, which Google does engage in due to their dominant position in mobile (of course, that's also just another better product)
Monopolies hold because companies engage in foul play to hold their monopolies. When Google goes out and pays Apple billions to default to Google Search, that is not a regulatory hurdle, nor is Google using its position as the Android platform maintainer and bundling Google Search with Play Services.
How is that foul play? Companies pay other companies to be the exclusive X all the time. For example, Coca-Cola bought an exclusive right to the only soft drink brand at all Fifa games. There are other examples like Nike being the official uniform of the NFL (including fan purchases), Windows paying computer manufacturers to be the default OS on PCs, and Netflix paying TV makers to have a Netflix button on the remotes for the TVs.
I'm really torn between these two perspectives. You are not wrong about monopolies. And yet, when Google and Apple struck that deal I thought, thank god I will not be forced into using whatever Apple has to offer up as a search product.
"Search" is a borderline obsolete concept. There is no separation between search, AI, information retrieval, knowledge synthesis, information tasks, etc.
I get what they're trying to say, but it still seems a bit unconventional to have a line chart where the y-axis is a share percentage.
Here's a graph with revenue in dollars by segment:
https://www.pasteboard.co/DwvXdQj2LXpk.png
This graph invites some pertinent questions. For instance, it suggests that their search revenue growth went linear sometime in 2020 and might be going asymptotic as of the last year. So I want to know what happens there over the next several quarters. Is the current quarter anomalous, or do deferred payments always make it look like that?
Second, is the geometric growth of Cloud cannibalizing their search teams, leading to less effort being put into sales. And so it’s not so much that demand is tapering off as that supply is being constrained as an opportunity cost. That $1m in salary nets more profit from Cloud than from Search.
As a power user of Google search for decades, I find myself using it less and less (maybe now 5% of my historical peak usage). There are several reasons, but the main one is because they have gradually traded search quality for ad revenue with the direct consequence being wasting my time.
If I type in the name of a company so that I can navigate to their website, and I have to scroll past my whole viewport of other companies bidding to be placed above where I'm trying to go, I learn it's faster for me to just type the website address into the bar instead of going via Google.
They designed a UX that made my life easier and caused me to form a habit, and then broke that UX for money causing me to form a new habit.
It's just one example of dozens, but the consequence is that I see 95% fewer Google ads than I used to. My guess I am on the leading edge (along with many others on this forum) of a wave of change of user behavior that spells pessimism for Google search revenue.
It is unfortunate and only sometimes sustainable to alienate a third of your user base to extract 2x as much money from the rest for a net 30% increase in short term revenue. It’s not repeatable usually.
I'd assume Google leadership weren't unintelligent, looked at the trends, and decided maximizing search revenue per user was more advantageous than search quality.
E.g. how Amazon knows they have a problem with counterfeits and low-quality copies that damages their brand, but chose volume over quality
Neither company will ever explicitly put it in those terms, but it seems obvious Google isn't looking at search as a growth engine anymore.
It’s not a judgement of intellect but of character. Those people were forced out of Google when the advertising/boiler room mentality took over.
Amazon kind of does say it but they were clever about it. They don’t let rhetoric win only raw numbers. That means they will always shill or scam for profit. Has been that way for decades but only now are people paying attention.
> I learn it's faster for me to just type the website address into the bar instead of going via Google.
It pretty much always was, assuming you type reasonably well anyway. Especially once browsers just started guessing at what you want by automatically adding "https://" and ".com" to whatever you type into an address bar and trying that before redirecting you to a search engine.
> Is the current quarter anomalous,
Yes, to an extent. There were three unfavorable circumstances other than AI eating into search: FX (major), the World Cup timing, end of de minimis exemption in EU.
Can you explain how these affected Google Search? My mind isn’t connecting the dots.
They affected search _revenue_, this was the subject of the discussion.
That’s almost always a delayed effect. Move software people around and the revenue effects aren’t instant. In a heavily R&D-oriented area it might be 2y or more.
However customers often take a while to adapt to changing conditions.
If for instance you enshittify a tool brand, first the supply chain needs to drain of old inventory and then customers need to be confronted with the new product before they react, and that may take several interactions.
Ok this case that doesn’t describe people using search but does describe a monthly or quarterly ad spend. Once the feature factory shuts down it takes a bit to notice the new trend.
Thanks for sharing, search revenue is growing strong. It's mind blowing that they earn ~180m per day from people searching internet.
These figures are just for the latest quarter, so Google's actually making ~$700m per day from search!
Well not that surprising given that the results are now 80% ads.
The real trick is that they're pretty much the only relevant ads on the entire internet. That and they pretty much force companies into paying so that people that search specifically for that company actually see that company as the first result.
Thank you for showing the actually useful chart.
Here's a dual-axis graph, revenue $ left axis, % share of revenue right axis.
https://www.pasteboard.co/yCGoS8kxEy7Y.png
Google Cloud clearly on positive acceleration for revenue share.
Might be useful to scale yearly revenue percentage points relative to graph start year, so f.ex. 2023 percentages sum to (total revenue 2023) / (starting total revenue).
Would give a better sense of left-to-right momentum over time when the entire pie is growing.
Everyone already uses Google, so every quarter the revenue goes up it's definitely not because of a higher market share...
Why does it even need to keep going up anyway? Is 60 billion not enough?
Depends if you invest and want your investment to grow
The growth doesn't need to be from Search. Even with the current level of search growth, Google's total revenue is up 25% year on year, operating income is up 30% year on year.
You are wrong. Search is already profitable. It doesn't need to become more profitable. The profits can simply be used to improve the profitability of other offerings like Google Cloud.
That’s not the way Wallstreet thinks. They insist on continuing growth, year over year. Accelerating growth, even.
If you don’t show growth every year, then your stock tanks because you can’t show them the profit that they would make through buying your stock today and then selling it next year.
At least, that’s the way they normally think.
Yes and... parent was making the aggregate conglomerate profitability growth case instead of the single-product one.
Wall Street generally cares about the former more, unless the single-product is only-product.
In this case, that's the fundamental question about Google: is it only an ad company (in which case those numbers are the only ones that matter) or more (in which case total corporate revenue is more important)?
For Wall Street, I think they feel like Google/Alphabet is just an advertising company.
Everything else is an also-ran, and doesn’t materially affect anything, unless it costs a huge amount and doesn’t provide a suitable ROI. And here, AI and mega data centers would definitely be a problem — way too much capex, not nearly enough ROI.
Notice how for both "search" and "everything else" there's a peak at almost every year boundary. Trying to juice the EOY numbers, I guess?
Both "search" and "everything else" are primarily advertising revenue[1], and advertising spend is always heavier in Q4 because of (Black Friday and) Christmas.
[1]: As the page says,
- "Search" means "ads on Google Search and on other Google properties such as Gmail, Maps and Google Play"
- "Everything else" means "YouTube ads, subscriptions and devices, Google Network and Other Bets".
Matches my experience in adtech, Q4 was always at least half of our yearly revenue. Q1 usually came in at less than 1/4 of Q4.
The story goes that Black Friday was named that because it was the break-over point between where most companies were in the red versus when they turned the corner and were now in the black.
At Whole Foods eStore, during the time I worked there, virtually all of their profit came from Thanksgiving. Not before, not after. Just that one week. Christmas was also something of a bump, but the rest of the year operated at a loss.
should have grown your "how do I pay these credit card bills?" vertical
Conspiracy theorist discovers seasonality, 2026. Colorized.
Edit: I misread the graph. It's the actual number.
(Love the cheeky exponential right past the end of data at the end of a straight line.
Forecasting 501: forecasts say the boss is smart)
Isn’t it the actual number?
Thanks, and also, wow.
Is google cloud revenue curve really that smooth?
Thank you for that. Super interesting.
I'm surprised GCP rev is growing so fast. Anecdotally, most devs I know still prefer AWS.
GCP got really, really good in the last few years. The cross-account story is now better on GCP than on AWS. BigQuery, Spanner, Pub/Sub, GKE are all best-in-class. AWS has its advantages too: CloudFront, Lambda, S3, DynamoDB, and IPv6 support are all best-in-class. It really just depends on what your product's actual architectural needs are, and whether you have access to nosebleed budget to pay for it all (these services are all staggeringly expensive).
Cloud revenue is really concentrated now, AWS is the only mass market platform.
Everything else is “call for pricing” for all but the simplest use cases.
Somewhat impressive that search share of revenue is 5% down, but search revenue is 12% up..
They have been juicing their numbers recently .... https://x.com/MaxAnderson/status/2080229375773941871
“Recently”?? Have people not seen the findings of the AdTech Antitrust lawsuit they lost? Y’all should google it (heheh) especially the ad auction rigging parts of it, including Project Bernanke.
What they’re doing now is just being a lot more overt about it, because they want to carve up their old cash cow to feed their AI ambitions before ChatGPT and Claude eat it up first.
I think I'll use the DeepSeek Search API instead and "google it" that way instead
They can't juice, because advertisers are now good in calculating conversion rate, roas, cpa, etc, so they would shift budgets to other channels like overnight if see Google underperforming.
There's a reason why GSP (Generalized Second Price) auctions are called "truthful auctions", and that's because they elicit the true value as the bid from the advertiser (in theory).
So (in theory) advertisers will lower their bids if they're not getting the desired value from the clicks; and over time some will migrate budgets to other channels (like "influencers"? shudder ...).
(Doesn’t change the point of your comment, but doesn’t Google use first-price auctions now?)
I don't think so. First price auctions are not truthful, and advertisers hate them. But there are 50 shades of gray between a second price auction and a first price auction.... if you get my drift.
Of course the big spenders on Google with the multi-million dollars advertising budgets won't just change their spending behaviour over night. That takes time - like anything in big corporations.
Big spenders already do not bid on google directly, but balance budgets automatically between multiple platforms and channels base on performance
Depends on the big spenders, tbh. Internet native brands are more likely to do this, but larger more staid companies will take a lot longer.
> but larger more staid companies will take a lot longer.
I still believe large spenders already advertise on multiple channels and balance budgets based on performance.
Sort of. It really does depend on the company and how they're set up. Like, brands using agencies or more non DR advertising only update on marketing mix models which are much slower.
what channel actually provides most of these ad buys that would satisfy their ad dollars?
Google has been sued for being a monopoly, and it's not because they're just really good. It's because there's basically no other market that hits any of the dollar costs.
> what channel actually provides most of these ad buys that would satisfy their ad dollars?
advertisers decide which channel justifies.
They still bring 250B ads dollars to google search, meaning it provides more than 250B value to them,
so no.
meta earns lots of money too
What other channels? The alternative on search is Bing and it's a tiny market. Then there's display which is total dog shit.
Ads is highly fragmented market, google has yt, display, mobile ads, there are tons of other platforms (meta, linkedin) where you can advertise.
That first price auction complain is bs, advertisers will just stop bidding $5 for top click and start bidding $1.1 in his example to hit their goals.
Ad tech started it's migration to first party auctions before 2020 including Google. This is old news in ad tech. Not sure about the correlations the X poster is making.
I (and a non trivial number of people I knok) have switched to Kagi for search just to avoid having to deal with the bullshit that is the above the fold google search results.
Course, they win anyway because I also pay for youtube premium to avoid seeing ads..
Feels like the world is becoming a split between people who can afford not to be the product and people who cannot.
People take the ad supported internet for granted, and genuinely believe that if we could just put companies in their place, we could have an ad-free internet that is totally free to use.
ok sounds great. let's hear about this place we have to put all the companies in to make 100% free commerce a reality for everyone.
the real issue, imo, is that we would have to get 90% of consumers to stop relying on advertising to make their purchasing decisions.
We can have that. It would be significantly less toxic too. Meta, X and similar would die.
There would be less monopolies and software industry would consist of smaller competing companies trying to please customers.
Kagi is great!
https://xxcancel.com/MaxAnderson/status/2080229375773941871
Wow, that X post is the most succinct but persuasive and damning thing I've read about Google's ad business developments in years (I don't watch it particularly closely.) Thanks!
Don't take it at face value. There is a serious rebuttal but I cannot find it now (post is from previous quarter). Anyway, he's twisting facts to fit the narrative.
If this is true how is it not fraud or just regular old theft?
Fascinating read, thanks! The counterpoint to "slaughtering the golden goose" is: If you're all in with AI, this is the rational thing to do, no? If AI takes over, search becomes irrelevant, so better extract as much value from search as possible while it's decaying and not dead yet.
You should submit this as its own story. This is big if true, so they say (and based on the replies, it is true).
Gotta love seeing the complaint calling out "exact match (close variant)". Google sure does love text embeddings because it massively increases the keyword-search matches for auctions. After all these years, they definitely have no intention of fixing it for the advertisers.
Advertisers would have pulled out and Google would have lost revenue instead of increasing.
I'm not a believer in Google search long term, but advertisers continue to pay because they still get value - even if Google increases prices.
> Search volumes are declining as legacy search is being increasingly cannibalized by non-monetized LLM queries
Second sentence is empirically a complete lie.
Search volume is still growing, despite analysts asking on every call what Google is going to do about falling volume, and Google continuing to re-iterate: Search volume is still growing, as are clicks on ads.
I get it that everyone hates paying as much for clicks as they do now. You can hate it all you want. You can claim Google is lying about search volume and ads, but that would be massive securities fraud...
Haters gonna hate. It doesn't mean the king is dead.
can confirm; ive started getting advertisements explicitly meant for dentists
im very far from dentistry
Idk if I believe any analysis piece that has a separate paragraph for every sentence.
Random anecdotes like this don't equate to "company juicing their numbers". You need much stronger evidence than that to make such an assertion. There are legal and financial ramifications for lying, companies are audited, there are official forms and documents that public companies must file. Of course a company can lie on those forms, but in the case of a company like Google you need extraordinary, factual evidence to make claims like "they've been juicing their numbers".
You basically have to say, everyone from the CEO/CFO, to the auditors, the financial analysts, the legal team, and all the way down are all lying and this random guy on Twitter is telling the truth. Sorry, not buying it.
See the replies to that tweet. I agree, one swallow does not a spring make; but here there's a pattern. Ask anybody who does search advertising, and you'll hear the same story too many times for it to just be a coincidence.
Most people don't know this, but the Search Advertising auction is a black box. The advertiser just specifies a bid (the maximum they're willing to pay for a click); and the search engine promises that they will not pay more than that.
Here's a trick that Search Engines may (or may not, I plead the Fifth) use: the price an advertiser "i" who bid "bid_i" pays is bid_(i+1) * pctr_(i+1) / pctr_i where "pctr_(i+1)" is the predicted probability of click (pCTR) on the next lower ad; "pctr_i" is the predicted probability of click on the current ad.
Guess who calculates the pCTR? The Engine! In theory, if their pCTR calculations were 100% accurate, all advertisers would pay the minimum bid (which is typically $0.01)! Clearly, this is not desirable. So Engines juice the revenue by tweaking these pCTR values. Talk to anybody who works on auction mechanisms at a search engine, and you'll hear stories of how they tweaked these pCTR values.
> See the replies to that tweet
Social media replies regularly confirm all kinds of nonsense.
I don’t interpret “juicing” to imply illegal.
No one in Google is lying. If what the person in the Twitter post says is true, then everyone at Google is telling the truth, and so is OP.
And given all the replies to that post on Twitter, it sounds like it's true.
Juicing is not the same as lying. Did you read the post?
Some of the things he mentions is worse than lying like not complying to spend caps.
Google doesn't deny it though
Him:
> campaigns we’ve been running for years with $1000 daily budget caps suddenly began spending $2000+ per day
Them:
> How it works: Google can spend up to twice your average daily budget on any single day to capture high-traffic or high-conversion moments.
In this context it's being used as tantamount to lying. "Juicing the numbers" implies that something is being misrepresented which is a form of lying.
Yes I read the post (please refer to HN guidelines on asking if people read something) and didn't find anything worthwhile there which is why I mentioned what I did.
Posting here for others asking about lying/juicing since I'm rate limited.
~~~~~
Lying on financial statements is in fact illegal. Juicing implies that some number is being misrepresented as higher than it otherwise would be which is a form of lying and thus would be illegal.
Obviously there are some gray areas - "we changed how we measure this" or something along those lines can be considered "juicing" or just a matter of changing a calculation to make more sense, but the broad accusation is extraordinary and requires much more evidence than some random person on Twitter saying some things. As an investor in Google (individually and through ETFs) it has no bearing on any investment thesis I have because I don't care what random nobodies on the Internet say and neither should you.
While not negative, it seems that their total revenue and EPS was still lower than forecast, hence GOOG stock being down 15% today.
Their earnings missed by almost 30%, which is pretty huge in the stock market.
I think the bigger concern is that earnings misses are very rare for GOOG, and historically they've been able to hit almost any target that Wall Street expects. Their past earnings misses were all related to major macroeconomic events (2020Q1, which was the COVID shutdowns, 2022 all year with inflation from COVID/Ukraine + rate hikes, and 2019Q3 with the taper tantrum from Fed rate hikes), and most of them were more in the 5% range. A 30% miss, particularly with slowing revenue growth in their core business despite almost full monetization of commercial queries, could indicate that the golden goose is disintegrating.
For that matter, GOOG has been extremely correlated with macroeconomic indicators since about 2018, which means investors in the rest of the stock market should probably watch out. It's likely we're already in recession but don't know it.
> Their earnings missed by almost 30%, which is pretty huge in the stock market.
It's somewhat fake, as fake as last quarter's huge beat. It's basically due to their large share in SpaceX, which they have to mark to market at the end of the quarter. Anyway, that's not at all the reason for the freakout.
> Their earnings missed by almost 30%
which exactly earning number missed by 30%?..
Earnings per share. Analyst expectations were for $3.01 and it came in at $2.12.
Ok, this one happened because they invested into AI hardware build out. Actual operating income grew 30%+ q/q.
> Actual operating income grew 30%+ q/q
OI isn’t more “actual” than EPS. I remember back when Yahoo traded for less than cash and liquids [1] because investors didn’t trust management not to blow it on stupid shit.
[1] https://www.nytimes.com/2015/12/10/business/dealbook/how-to-...
google still highly profitable, so operation income indicates how healthy is business, and eps/net income indicates how agressively they reinvesting.
Yes. But framing one as “actual” implies it conveys broad, ground truths better than the other metrics. It does not. The ground-truth metrics would be forward ROA and ROIC.
> The ground-truth metrics would be forward ROA and ROIC.
that's not ground truth in environment when landscape (AI) dramatically changes every quarter, and investments are uncertain bets with huge win potential.
Your ground truth metrics are: 1. How healthy core business: operating income. 2. How aggressively company reinvest: net - operating income.
That was already forecasted, but not that they were going so cash flow negative.
Its just interesting how wall street views ant and google as the same caliber companies, even google has way more stronger baseline and ant is way more under the water.
So replacing actual organic search results with hallucinating AI summaries reduced profitability? Oh no!
More like ChatGPT and AI is disrupting the search market.
Is the reduced profitability in the room with us now?
Yes, by definition, they literally posted a loss this quarter.
The loss is because they are building data centers for AI. Profitability of search is up.
A few days ago a Google found me something I was searching for, but via ads and not search. In the middle of searching raw part numbers, the ad became 100% relevant. It was a weird experience clicking on the ad; something I never ever do. So maybe this is a bit of good news? Yardinflatables.com if you're curious.
That’s wild. It’s possible that Google shows me relevant ads. But if it’s formatted anything like a sponsored result, I think my eyes just skip past it. Like after so many years I just have ad block built in to my retinas.
I wonder if one was actually useful, maybe I’d notice it?
We easily adapt and block out stuff we don't want to see. In big cities we do this automatically - we don't even notice the dirt, parked cars, litter, people.. unless we consciously focus on them. I guess it is the same with ads, they lose their power as we adapt to them.
The solution is to force ads upon you and hope that you accidentally click on one due to sensory overload. Or more ads.
Yeah Banner Blindness is definitely a thing, it's something to keep in mind with UI design where you can end up making something so in your face that the user just ignores it even harder. https://en.wikipedia.org/wiki/Banner_blindness
If it was actually the best result for you, they wouldn't need it to be an ad.
Competitors on Apple's App store can pay to show up when consumers search for the app they're after. To counter-act this, some apps will pay to have their app show up, as an ad, after you search explicitly for them
Meaning that, due to and capitalist incentives and double-dipping from tech companies, what you're searching for may actually be what's advertised
Oh yeah. I recently started with engaging with a vendor that has good SEO and I would just instinctively skip past their search result because it was one of those expanded ones.
Google are removing vast amounts of pages from their search indexes, leaving only "primary sources" that AI chat can reference.
So if you have a long-tail page ("obscure part number") then the only way to show it is buying an ad for it.
Is this related to the fact that I'm regularly unable to find many github repos via google?
I think github hides repos from indexing by default.
that never happened before. and kagi still shows them
Kagi might be (intentionally or accidentally) working around GitHub's attempt to prevent indexing of repos.
A questionable move on Google's part, if true. Can you share any evidence?
Evil is what Evil does.
Does any of us have any insight in Google manipulating the world?
Other than it's leading to their losses, no.
I’ve always wondered what % of ad clicks are just misclicks.
When we created battle.net at Blizzard for Diablo, there was a bug where the game would launch in full-screen mode and hang, and the only way to escape back to the Win95 desktop was to click the ad displayed by battle.net.
We weren’t aware of this.
The ad company we used notified us of this issue and gave us three days to fix it. Afterwards our click-through rate went from something like 3% to .25%.
That's hilarious. I miss the old Battle.net.
"All clicks are click fraud" is related to the dead internet theory.
I get what you're saying, but fraud is different from accidents by otherwise real people.
Well... I'd say that
Many of those "accidents" are not really accidents: I've seen two kinds of ways sites engineer those "accidents"
(1) many sites, like phys.org, have crowded and confusing layouts that try to trick you on clicking on an "x" or something to close an ad but really clicking on the ad, there's a lot of deniability on this on mobile where the touch accuracy is poor
(2) a few years back there were a lot of sites which seemed to always change the layout when you were trying to click on something in the sidebar, anandtech was one of the worst, i could swear they were watching the mouse events and predicting the click events. this stopped all of a sudden, could be Google put the smack-down on this behavior
Ah okay, I had misunderstood you as referring to like, bot farms or something, not developers going out of their way to make it easier for people to accidentally click
I've long suspected Amazon's search is so crappy because it makes their ads necessary to actually surface a product. I guess Google got the idea as well.
The worst part is I've seen search other video sites that used to surface exact titles stop working around the same time. I'm not sure how to reliably find things I know are there anymore.
I've had so much greater success using the built-in AI ("Alexa for search") that I no longer use the regular search except briefly. I imagine it will be destroyed eventually as regular search was, but for now it's dramatically better.
>> I've long suspected Amazon's search is so crappy because it makes their ads necessary to actually surface a product.
I thought it was just because they were forcing third tier Chinese knockoffs for everything I searched for. After a few months, I gave up completely. I now look for product reviews on YT, THEN go back to Amazon and search for exactly what I'm looking for. Even then? The search results are still jammed with cheap knockoffs.
Fascinating; they must be bidding on the part numbers as search keywords.
Now I wonder what the median CPC is for part numbers (I’d guess very cheap), and which one is the most expensive (no idea, super curious).
I’ve had this exact experience a couple of times in the past few weeks. Their “sponsored” ads of a kind of product that I was looking for (based mainly on description for the use I was intending) gave better results than any AI model I tried to use to find a product that fit my specific use case.
Found it interesting that I’ve flipped my search tool usage in such a short time. I use models for most “searching” but then utilize Google Search as the last resort.
Google successfully trained this human to click on ads.
Thankfully I never see any ads - ublock origin kills these off. That includes the horrible UI choices Google made on its search interface. A custom ublock origin rule filters away the pointless "others also searched for pink cats" while I was searching for epic skyscrapers. Evidently Google tries to link-lose me here, wasting my time.
This is exactly what the ad network is meant to do, and their ability to monetize this ability means competitor's ads (like meta) become less valuable.
Is this how we fix google search? Make advertisers have to provide ads that are actually helpful search results, sort of like https://xkcd.com/810/ but for search ads
> So maybe this is a bit of good news?
How is it good news?
Consumer searches for $FOO. $FOO does not show up in the search results.
At this point, the search is useless to users.
When StackOverflow tells question askers that their questions are off topic, everyone loses their minds and cheer that StackOverflow is now dead.
But when an algorithm does it, they go "wow such future"
I'd still try to get to the result a different way, even if it involves doing another search. Same with Amazon.
For me it didn’t find a file on GitHub with exact file name, but found it via llm summary.
the bigger question is why the heck did you use Google, was it only after you exhausted all other LLM options
Pre-AI, we used to spend upwards of $60K a year on Google Ads to keep our inbound pipeline running.
In the post-AI world, that spend dropped to $0. Not because Google Search suddenly stopped working, but because our segment (low-code platforms) was one of those that AI was going to disrupt significantly. We had to rethink and adapt our offering to the AI world before doubling down on marketing.
Now that we’ve repositioned and adapted our product, our marketing team has started experimenting with OpenAI as a channel, but we haven’t switched Google Ads back on.
There’s also something I find interesting about this shift. Google Ads always felt a bit like a mafia tax. When we stopped paying, our organic traffic seemed to take a disproportionate hit too. We could never quite figure out why. Maybe it was coincidence, maybe something else, but it left us questioning how independent organic search traffic really was from paid search.
How will OpenAI become a channel ? Has it become more clear how ads will be served from inference?
Today open AI is serving ads to App free users post their queries. If the ad is relevant and adjacent to the query then it does show the ad in the chat. It isn’t clear how relevant ads are and users behaviour on this yet but worth experimenting to learn.
Google purposely killing the golden goose by forcing all of its users to use the AI overview is a bold strategy.
Blaming AI is correct but perhaps not the way you think. I think a lot of people actually use other people's AI tools to do their searches now. Google's attempt to grab that back via their own AI tools is so far not really working. Google is no longer the go to tool for answering questions or doing research.
I used perplexity for some time. These days, I have claude and chatgpt. They search on my behalf. Sometimes I still do a Google search but I mostly just use it if I want to open a website that I don't remember the url of.
They’re not killing anything. Search revenue is up this year.
And it’s not like they can stop the long-term move towards AI from traditional search engines.
All they can do is try to compete with their own AI. Otherwise OpenAI and Anthropic will run away with it.
Don't worry, the AI overview is actually just a salesman for advertisers going through an introductory period.
>killing
But the search revenue is growing at a high speed.
The article wording is just unfortunate.
The non-misleading title would be: "Google Cloud growing way faster than other sources of Alphabet revenue".
About 80% of the time the AI overview is what I want anyway.
If I have a really straightforward question and I want a fast answer I’ll sometimes Google search for the AI overview. But it’s so unreliable. I use opus 5.5 for any question that Google could plausibly screw up. This is a huge product failure on Google’s part, IMO. I’m a $20/paid user for both Gemini and Claude. It’s nuts that with Google’s massive head-start in AI (and apparently they still are capable of making a frontier model), they somehow deliver such a crappy version of AI by default in their flagship product. Google is probably in some part responsible for the public’s distaste for AI.
Yeah, I was annoyed when they first introduced it, but now I find it extremely useful
Bing introduced it first!
What do you mean force to use ai overview? AI overview is just the 1st result, you just scroll down and the legacy search results are still there.
Forced as in not giving an option to disable it
I mean people are naturally using AI to replace search, might as well as lock them in.
I'm wondering who published "Attention is All You Need" and brought this devastation to Google... Oh I remember, it was Google.
Google is just scared. Google has been scared since November 30, 2022.
Text search is fundamentally a deterministic problem, and squeezing it through a heavy non-deterministic, stochastic engine -- especially through a CoT LLM -- is inefficient from a first-principles algorithm design pov. Also, Google did great search before AI overviews using probabilistic linking and knowledge graphs.
I've been using DuckDuckGo's NoAI version as a fallback, and I've had great results so far; brings me back to the web I remembered growing up -- personal blogs, random forum discussions, and whatnot -- with just a fraction of the page bloat.
I say all this as a HUGE fan of Gemini, Gemma, and Antigravity.
> Google did great search before AI overviews
not really... search was great in 2008 or 2014, but not in 2022. seo spammers won by then, and their writing was even worse than opus 5.
I remember that the sites google shown before were sites you could get lost in. often they were communities. often they were sites actually written by an enthusiast of a subject.
these sites died. I wonder whether google was the victim or the culprit. the death of these sites did end up making their product worse. however, any site that actually hooked you meant less ad revenue for google. google wants you to come back from the result, since that's a second chance for you to click the ad. a result you come back from however is inherently a bad result.
You don't want Google to be a direct keyword search. Well maybe sometimes you do, but not usually. Text search is not fundamental to the Google user experience - DWIM (do what I mean) is fundamental. The ideal user experience is that you type in what you want and the machine finds it or does it. LLMs designed and deployed properly are infinitely better at this than keyword search engines are, despite being less predictable.
Example search: video card game with the robot guy
AI overview [correct]: The video card game you are thinking of is likely Inscryption, which features a mysterious, robotic-looking or masked scrybe (like P03, the robot scrybe of technology)
That's not what I meant at all. I understand no one would want 1:1 text search, and part of the reason why Google won in the 90s was because of PageRank. All I was saying was that basing a 'search engine' on a CoT LLM is very inefficient.
>LLMs designed and deployed properly are infinitely better at this than keyword search engines are, despite being less predictable.
In what way? How are LLMs more efficient and 'infinitely' better at this than what Google had before AI overviews? If anything, I find that search results have gotten worse.
Something like: An LLM can encode a query into a vector to match against a vector database of indexed pages.
You have to actually engineer that though, you can't just throw random stuff into ChatGPT and expect good results.
That’s not what they’re doing either though. If I’m correctly informed, they are still running bog-standard Google searches under the hood and letting the LLM find the relevant stuff in them. It’s a bit of a godsend not having to do it yourself since the original results’ quality tanked so much. And kinda elegant from an algorithmic perspective actually.
It’s still not as good as actually searching the web semantically as I used to often find myself wanting to get rid of results that sounded vaguely like my search term but actually completely missed the point, but it makes it somewhat bearable again.
Text search is, but normal people dont want text search. Normies want to concierge fetch them perfect answer on first try. LLMs are really good at convincing you they just did that.
pure text search (the deterministic kind you're talking about) is medieval technology that's useless in a web search engine
Yes, I'm aware. I meant that deteministic systems should be at the core (PageRank was deterministic), alongside other contextual clues and knowledge graphs -- things Google did before this AI overview crap.
What pisses me off is that you can't turn it off. Like, fine, you may bury and dark pattern the crap out of the disable toggle, but at least give users the choice to opt-out. And no, UDM=14 is not a toggle.
> I've been using DuckDuckGo's NoAI version as a fallback, and I've had great results so far; brings me back to the web I remembered growing up -- personal blogs, random forum discussions, and whatnot -- with just a fraction of the page bloat.
Honestly I don't believe you, despite the desire to. IME, DDG results are even worse than Google's; I've had queries that returned enough AI generated blog spam (and I mean utterly worthless borderline nonsensical drivel) to fill the entire first page of results. Not one organic result.
I jump between search engines and DDG had a big improvement a few months ago. It's pretty useful.
Lol, Antigravity got turned off.
Is it really devastation? It's not like Search shrinked, it's that everything else grew so much. Yes, the landscape is shifting, but Google now has multiple legs to stand on, which should be a good sign to investors.
The devastation in question is that their total revenue is up 25% over last year.
This isn't Google search diminishing; Google is serving more search results this year. This is their other ventures catching up to their oldest one.
Around 2005, Google published MapReduce, THE parallel data processing paradigm. The ecosystem from Yahoo, Hortonworks etc overshadowed Google with Hadoop, Spark etc. Google then launched both paper and product when it came to cloud scheduling and transformers.
I’d argue it was double click.
If they would have stuck to the original white paper and remembered the section on ads, Google Search would still be worth using.
Search revenue isn't down, both search revenue and overall Google revenue are up, it's just that search is a smaller portion of the total pie because Google Cloud is climbing faster.
Lol devastation. Google Search is up 12% YoY, but since Google Cloud is up 102% YoY it took more percentage of the total revenue. Yeah this definitely look devastation.
well, besides publishing that paper, they were pretty hush hush about it. they had a working chatbot 2 years before chatgpt.
Devastation? Are you and I reading the same financial reports?
Devastation is a funny way to put it.
Cloud is on pace to be bigger than Search/Ads next year...
Do you really think Search/Ads is going to lose 100% of its revenue by next year to flip that difference?
am i remembering correctly that "google cloud" in the earnings isn't just developer's google cloud bills (that's google cloud platform), it's also basically any product where a consumer or enterprise pays money to google for anything other than advertising - google drive storage, gemini pro, enterprise google workspace plans...
Not quite. Google Cloud is GCP, Workspace and Gemini Enterprise. Consumer products subscriptions like Youtube premium, Google storage and even Gemini (consumer) fall under "Google subscriptions", which is part of Google Services
> basically any product where a consumer or enterprise pays money to google for anything other than advertising
Not exactly - the consumer stuff (subscriptions and devices) falls under services, while cloud covers GCP, Workspace, and enterprise-specific cloud services (like maps etc).
Basically if you pay for it with a monthly sub on a personal google account (including Gemini stuff like Ai pro) it's services.
[0]https://abc.xyz/investor/faqs-and-general-information/
no, services is broken out separately.
Others want to nitpick but generally yes, before we had AI, the last craze was cloud, so they shuffled things around to the point that everything was "cloud". This is also how Oracle got to be the biggest "cloud" in the world!
I think not but it's irrelevant. Most of the growth is probably from big accounts renting compute/tpu for training models.
Workspace is under cloud but consumer stuff like Google 1 plans have their own line item.
I've tried to switch to Duck Duck Go unsuccessfully three times since its inception.
This time I have had no problem switching. I'm using Duck for 99% of anything I search for and it's just fine.
The 1% of the time, if I'm really stuck on something I try google shopping or images and its usually no better.
I realized quickly that google search was giving me a very distorted view in its search results, it is making a lot of specific editorial decisions that I wasn't quite aware of, or had lots awareness of over time.
Duck.ai is pretty good too. It's been nice to be able to finally switch, and it'll be interesting to see what happens with duckduckgo now that they can truly see some sustained growth (I can't be alone in this experience).
Isn't this good news because they're diversifying their streams?
Google really had developed only 2 good products(not including acquisitions such as YouTube): search and gmail. Their primary cow to milk has been search. The rest (I.e cloud compute) is not really a moat. I think we are facing a revolution/rotation where the these companies may start to become just “old businesses”(I.e IBM, AOL).
I don't really agree: it's pretty simplistic to boil Google's history down to two products developed 20 years ago.
I'm not really sure why you say that cloud compute isn't a moat. It's an enormous investment to compete there; there's a reason even large companies buy compute from GCP/Azure/AWS or even if they have their own compute don't attempt to compete. Additionally, GCP has been an enormously successful 'bet' for Google over the past decade.
Google has also turned subscription revenue for their various services into a major revenue stream; it'd be hard to call those various services (Google Drive, Google Play, etc.) anything other than successful.
Chrome doesn't generate revenue by itself, but it certainly drives advertising revenue across the rest of Google's portfolio and was developed in-house.
Finally, it's pretty strange to credit the success of YouTube as a revenue stream with a small loss-making company that was acquired in 2006 rather than Google, who has run it for the past 20 years.
It's not a moat because it's a commodity.
Enterprises actively do not want Cloud provider's services distinguished by anything other than speed, cost, and reliability, because features imply lock-in. They'd rather have someone else's computer as bare-metal and run features atop that.
That's a recipe for racing to the bottom in the cloud space against the other providers, where the wins are very raw: what hardware did you predict two years ago you needed today, what breakthroughs in information structuring have your competitors not yet implemented in their own clouds, etc.
It's raw capitalistic competition, and that's good for consumers... But companies don't want that because it's a path to net-neutral revenue in the long-term, which is not how you put your stock on the moon.
The history of the cloud computing market belies your argument, in that the entire market has grown significantly since 2020, with all 3 big cloud providers >3xing their operating income (and 3-5x'ing their revenue) over that period. That isn't what you'd expect from undifferentiated, interchangeable commodities.
The scenario you've described sure sounds like the enterprise ideal, but it probably isn't the reality: in fact, some combination of high switching costs, feature differentiation, and/or price insensitivity means you have 3 highly profitable businesses.
If your business is tech and compute is a major cost of business, then sure, you want to avoid lock in.
But if your business is not tech, it makes a hell of lot of sense to pay a few bucks extra for a managed service like Cloud SQL to host your databases and let Google handle the security patches and backups etc, instead of hiring your own DBA to do it for you.
> GCP has been an enormously successful 'bet' for Google over the past decade.
I disagree on this. It's not clear how much money they are actually making and how much revenues are shifted over from other business lines to GCP because GCP earnings growth is / was valued higher than other business lines by the markets.
That's the big criticism on Microsoft, not Google. On GCP this isn't the case, because Google does not have a huge install base of MS Office to give "free" 50% Azure credits (but paying the same) faking their cloud numbers.
GCP has a reputation on being the fastest compute and network available. Also the most bang-for-your-buck (on hyperscalers) ML infrastructure by far (because TPUs)
Amazon is "the default" (and most expensive). Works with everything.
Azure is "Microsoft cloud". It's not fast, cheaper but certainly not cheap, ...
But of course that should be interpreted as GCP being 10x the cost of on-prem hardware (for equivalent storage/performance). Azure 13x or so. And Amazon a solid 20x (mostly because none of their products deliver the performance advertised and because if you buy 1 thing of Amazon, they bill you for 20 different things). Even with the price hikes a server under your desk (not the same, I know, however, once you have 20 servers in 2 rooms in 2 buildings and kubernetes running the workloads it is the same in reliability)
I mean, $11B in quarterly operating income ($33B in revenue) is clearly quite a lot. The only reasonable argument here is that this includes hardware sales (i.e. TPUs), but it is still a lot even if you subtract that. I think many folks internalized the narrative that GCP was an also-ran many years ago (when that was demonstrably true), but haven't updated their priors now that revenue is almost the same as (and may soon surpass) Azure's.
Google has spent $132 billion on capex this year. Most of that money is going to GCP. We have to think about the hundreds of billions being invested to contextualize the profit numbers. $40 bill a year is not enough to justify the capex they’re partaking in, GCP still needs to grow a lot to be successful.
I don't think it's correct to view AI capex as simply booking profit for Google Cloud - theoretically almost every aspect of Google's business should indirectly benefit from those investments. Bigger picture though, the bet behind that staggering capex is future profits, not current profits (see: OpenAI, Anthropic). Even if you think that's a stupid bet, the evidence won't be in 2026 income, it'll be in future income.
The vast majority of that money is going to AI. Some part of it is for internal consumption, some of it is for resale to GCP customers, but it is not some sort of loss making subsidy to prop up GCP.
All the AI revenue is booked under GCP. This isnt any different from people saying openai and anthropic are selling a dollar for 50 cents
GCP is a joke. Their sales reps are useless, and their customer support is non-existent. They are about 8% of the cloud computing marketshare as a result.
I hate Azure, but Microsoft is at least trying to sell it properly. You get a human you can talk to and their support is responsive (although it's also useless).
> Finally, it's pretty strange to credit the success of YouTube as a revenue stream with a small loss-making company that was acquired in 2006 rather than Google, who has run it for the past 20 years.
As a Youtube user, I don't really see any improvements in it (aside from technical ones) compared to 10 years ago.
> GCP is a joke. Their sales reps are useless, and their customer support is non-existent. They are about 8% of the cloud computing marketshare as a result.
This is an outdated or straight-up incorrect take. In the past quarter, Google Cloud's revenue was ~$30B, just shy of Azure (~$33B) and well shy of AWS (~$45B). That's about 28% of the cloud computing market excluding other players. Additionally, Google Cloud has grown a lot over the past few years and has been steadily eating away at AWS and Azure's market share; by next year it seems likely that it'll be bigger than Azure.
> As a Youtube user, I don't really see any improvements in it (aside from technical ones) compared to 10 years ago.
Sure, it's a website that serves videos (and ads); just because the fundamental proposition hasn't changed doesn't mean that Google hasn't done a hell of a lot of work into turning YouTube in a business that earns tens of billions of dollars a year.
Most of the improvements have been keeping it running in the face of being the place everyone stores and retrieves video, and that's a lot of invisible work (but is the real reason you don't really see working YouTube competitors; it's a technically challenging big-iron problem).
The knife in the back of Youtube competitors is that people ad-block because they don't like ads, not because they have some kind of moral compass. Youtube mostly tolerates ad-blocking, which pretty much cements it in place as the absolute best streaming service (no ads, no subscription, unlimited free consumption).
The result is that it's basically impossible to get off the ground to compete with yt, because early adopters are almost universally tech forward. And tech forward people don't pay for shit (except the 1-5% who do).
Android, Maps and Chrome I use it almost daily for years. Dont know if are great at revenue, but are great products for me :)
To be fair, the parent is excluding acquisitions:
> not including acquisitions
Of which only Chrome is in-house created. I wouldn't think Chrome brings in a lot of revenue, and these days I'd argue FF is a much better product.
As a FF user, I've had to fall back to Edge/Chrome many times because some obscure hospital telehealth portal or bank website or whatever has issues.
I want FF to be successful, but unfortunately it's not really up to Mozilla
I’m sure with Chrome, Google has smart people calculating the value of the data that they get from it. It doesn’t make money directly but it’s gotta be a huge money maker.
Chrome logs every site you visit with the mothership, and that is very valuable data to Google. That allows them to spot, in realtime, trending sites for example. They see what the users are doing on the Internet in realtime and act accordingly.
I wouldn't call Chrome an acquisition, but it wasn't birthed at Google.
Huh? It was built entirely in-house at Google.
Chrome the browser? The browser based on Webkit née KHTML?
Literally every modern browser descends from Webkit. If anything Chrome diverged from it by switching to Blink in 2013.
So you understand why I'm replying to a comment that states, "Of which only Chrome is in-house created".
It's not.
He specified "developed."
Google didn't create Android or Maps. Android was made in 2003 by other people. Maps was Keyhole and something made in Australia.
I don't know enough about Chrome to say.
It’s 2026, I would absolutely say Google “Developed” Google Maps and Android even if they did not “create” it originally. At what point can we attribute the success of these products to Google as a developer instead of Google the buyer.
Android had a market share of 0, with no released products when they bought it. The 80%+ market share today was all Google.
Google Maps was purchased (pre Google IPO), but the original (“Where2”) was a desktop application. Google completed rebuilt it alongside the acquisition of other data sources, and released the web page. Years later, they built a mobile app which became one of the biggest apps of all time. Should we not attribute that success to Google instead of the Australian startup building a desktop app?
Same with YouTube
When YouTube was acquired by Google, it was already pretty similar in shape as a product to what it is now. The biggest differences are scale, the addition of advertising, and ancillary integration with other Google services. The first is a function of growth, the second is exactly what Google would be expected to do to monetize the service, and the third is another logical implication of "acquisition". (You could quibble and say they added vertical shorts and live video, but I don't think those are even fundamentally different from a product perspective from what YouTube was already doing in 2006, just fast-forwarded to adapt to the consumer technology we have today).
That's very different from Android, which was an unreleased prototype that had zero users and was dramatically different even from what ended up shipping as the first product, let alone what it is today. Android at acquisition would be unrecognizable from what the majority of people worldwide are typing on this very minute.
Yes certainly if you discount the 20 years of development, the creator tools, the advertiser tools, monetizing creators, live streaming, completely rewriting the whole thing, etc. Google didn't develop YouTube much.
> Yes certainly if you discount the 20 years of development, the creator tools, the advertiser tools, monetizing creators, live streaming, completely rewriting the whole thing, etc. Google didn't develop YouTube much.
I never made that claim.
Ah yes my mistake to respond to the spirit and reasonable implications of your comment rather than just the literal words contained in it.
If that's what you think the "spirit and reasonable implications" are, then you didn't understand what I said.
Are you serious? Just the hardware build Google did for Youtube alone. They 1000x (not %, times) their backbone bandwidth and they're still increasing it. Youtube used to have 2 small datacenters where they were acquired. Now it's 20% or so of half of the total Google DCs.
That's nothing?
> Are you serious? Just the hardware build Google did for Youtube alone. They 1000x (not %, times) their backbone bandwidth and they're still increasing it. Youtube used to have 2 small datacenters where they were acquired. Now it's 20% or so of half of the total Google DCs.
> That's nothing?
Either you replied to the wrong comment or you didn't read the comment you're replying to.
Android, Inc was 100% a Google acquisition from 2005. I thought this was a well known fact?
https://en.wikipedia.org/wiki/Android_%28operating_system%29...
I... yes, I know. But see the entirety of my comment above, I guess?
To clarify in good faith: what percentage of Android development do you think went on before 2005 in, let's say, mythical man months. 5%? 1%? Less?
While Android is technically an acquisition, it was an unreleased prototype when they bought it.
It's safe to say Google brought Android to the level it is now.
Webkit, which was forked by Google.
Webkit was forked from KHTML. Nobody "invented" Webkit.
Not a moat and not big but... for SMEs "Google Workspace" is a godsend from outter space.
This is what allow little SMEs to not have to suffer that piece of shit that Windows is. I know people running their SMEs (and I helped them set up Google Workspace) from Mac and Chromebooks since years and years and who do not ever want to here again from anything Microsoft.
They're basically doing everything inside "Google Workspace" (formerly "G Suite", formerly "Google apps for domain" because Google's product naming is just confusing).
Gemini is also IMO excellent for everything that is not coding. It's really rare that I use Anthropic models (which I pay a subscription for) for anything else than coding.
GMail / Drive / Google Docs / Google Spreadsheets are great for a shitload of SMEs out there who want to give Windows and Office the middle finger.
By SME do you mean subject matter expert or Small-Medium sized enterprise?
I could make this make sense either way
Businesses.
> Gemini is also IMO excellent for everything that is not coding. It's really rare that I use Anthropic models (which I pay a subscription for) for anything else than coding.
I use Gemini Pro for every day stuff and Opus is much better than it. A lot more features and everything works better, especially in the websites. Gemini is just... dumber overall. I had a project/gem (now replaced by a skill) and sometimes I'd start with them and then veer of course along the way. Gemini would religiously follow the initial context, stupidly, while Opus realized that a good chunk if it wasn't needed anymore after my last prompt and did the right thing.
Why separate out products developed internally versus acquired and growth? There is an almost moralistic element in the tone of “well they just bought it”. Sure, they bought it and grew it into a behemoth, plus what really matters is not the provenance but how much money it makes for them. Plus, it’s reasonable to call YouTube (and instagram, which also gets the same treatment) two of the all time best corporate acquisitions. It’s not easy to buy a company and grow it like that.
It's absurd to say that Google did not develop YouTube. They acquired it at a point where it was a galaxy-scale cash incinerator and made it work economically using their superior platform.
Yeah. I was going to say. I really dislike Google, but what they did with YouTube (whose acquisition I saw as a mistake at the time) is impressive.
They didn’t. They bought out another company. Did Meta create WhatsApp? and Snapchat? Everything else that Meta tried to stick their foot in has failed, but Muse seems to be promising. Both are very profitable ad companies. With a few me-too hardware products. Ads bring home the bacon.
aka waited for cost of storage, bandwidth, compute to come down below revenue from advertising.
As it would have done naturally anyway
I think it’s naive to assume the ad revenue would have came at the same pace naturally. At least not without completely pushing users away and ruining the product (nobody likes ads but YouTube ads aren’t the worst). Google having an ad business was a strategic asset for YouTube as a business
Youtube was full of pirate music videos. If Google (or some other heavyweight) didn't buy them, they probably would have been sued out of existence like Napster and etc.
Only if revenue grew quickly enough.
When Google bought YouTube, it already had Google Video. Google saw that YouTube had market traction and pivoted quickly, to its (and YouTube's) credit.
Don't worry, they've put an Advertising guy in charge of Youtube, and he's busy inserting as many ads as possible into each and every video...
People still don't see where this is going.
TV had both 15-20 minute of ad breaks every hour AND product placement during actual content.
That's where we're going in about 10-15 years.
I think the generally accepted ad load has been shown to be about 20%. About 20% of TV is ads, 20% of social media feeds, etc. Seems natural that we’d get there with YouTube.
YouTube has had sponsors and inline ads for years from the content creators, so I’m fairly confident we’re already approaching the saturation point in some form.
Difference is, TV had (has) content in 30 minute chunks. But Youtube has, among others, Shorts, which are often 30 seconds. But still Neal Mohan wants to show ads on Shorts.
On top of these ads, creators are inserting their own ads ("this video is sponsored by ...."), so it's ads all the way down (like turtles).
> People still don't see where this is going.
At least 30% of Americans use an ad blocker.
Google doesn't pay for transit. Their private glass was the whole reason the acquisition worked.
And putting cache nodes in residential ISPs and exchanges all over the world.
Shhh just let the Googlers believe they’re elite super geniuses when all they do is acquire successful tech like Android, YouTube, and on and on.
Everything they make from within flops 99% of the time.
>Android, YouTube
Before they acquired these, how were they doing? I'll give you a hint: they weren't exactly how we knew them today. Android was literally a concept and YouTube was bleeding money with no realistic path to profitability.
> Everything they make from within flops 99% of the time.
As do all inventions? Of course, you just don't hear about all the failings from individuals or smaller companies that went bust as a result. The important thing is the 1% that succeed are so successful it offsets the losses.
Google, Meta and Microsoft’s track record. Is not that good beyond their core in fact, they’re horrible when the playing field is level, Nadella right now seems to be the most vulnerable. It’s copilot or bust..
those geniuses that made acq. grow all have big retirement exit btw. Nobody in google worth low digit NW if they have been there for +10Y, so yeah they bet on their work and beat market for several years
Working with GCP for 6 month now; AWS, with its own weird concepts, is superior. True enterprise.
As a simple example, a week ago we had the GCP outage in UK, their status page said all was good.
That’s nonsense. What about Maps, Sheets, Android, Meet, Chrome, Cloud etc. I don’t even know how you can exclude YouTube. It’s basically something they’ve worked on for more than a decade at this point. The number of google products we all use on a daily basis is pretty stunning.
The great percentage of it is free to gather information to service their ad empire the public isn’t paying for it directly.
Google Pixel / Android are very popular. Chromebooks also did well.
All Google loss leaders to service the ad company, Microsoft is also running into the same problem. Xbox, Blizzard games and Copilot are not profitable and to top it off. Between the two of them, they have spent upwards of $330 billion dollars in 2026 on AI models and AI CapEx. Microsoft laying off 60,000-70,000 people didn’t come out of thin air.
What is Pixel's marketshare, for developed markets? Despite a decade+ of competing, have they made any significant dent in iPhone's share?
They’re something like 5% domestically, a little less if you include all budget devices, a little more if you only look at “premium” phones in its price category.
It’s likely made no impact on iphone sales, but I don’t think it’s a reasonable goal. Android and iPhone users don’t meaningfully switch, the goal would be to gain Android customers, and it seems, drive market direction. 5% of all US phones, which is 10% of android phones, doesn’t seem terrible considering they’re certainly spending a lot less than Samsung et al in R&D
Virtually nothing. Their processor is at least seven years behind the times. It’s not profitable. It’s just a Me-too loss leader to service the ad machine. 3D models and data-centers are built on top of that.
Pixels are good, if you replace Google's OS by Graphene that is.
I don't think the question of "good products" is really relevant here; the important aspect is profitable products. And in that arena, nothing beats the money printer!
They used to have a second minimint in AdSense et. al. ("Display Advertising"), but that shrinks by the year economy-wide as the vicious cycle of data tracking, ad blocking, and paywall dodging continues. Now it's a mere $7B[1], compared to $11B for Youtube (technically also Display Advertising but it gets its own segment now, I guess) and $63B from the money printer proper.
[1] Actual report here: https://s206.q4cdn.com/479360582/files/doc_financials/2026/q... Interestingly, display revenues are slightly up! But still, in Google land, "slightly up" is potentially a scandalous failure. Perhaps they settled into better agreements with big publishers ("sell side") after it became clear that they wouldn't actually be punished for having a Display Ads monopoly, despite losing the antitrust case brought by Biden's DoJ.
:(
Yes but it's like the meme: the old is deprecated and the new is not ready yet.
Their stock is down 13% today from this news and only up 2% over the last year.
It's not when it happens involuntarily :-D
Google has been extremely aggressive in growing its Cloud business in the last few years and has been offering big incentives to companies willing to switch from other providers. Looks like that's beginning to pay off as companies start to pay the unsubsidized bills.
Yeah, diversifying into supporting the Gaza genocide.
https://www.democracynow.org/2026/10/29/sofia_liguori_google...
I'd be curious how much Workspace contributes to Google's revenue. I don't see it broken out anywhere in the reporting. Assumedly it's part of the $30.7B cloud revenue.
I was just looking in the Workspace account of a relatively small local business, and realized they're spending ~$6k/yr on Workspace. Multiply that by however other small businesse are on Workspace, add in larger enterprise customers, and you're probably at a decent chunk of revenue.
I checked my Google search history. Compared to pre-AI era, my search volume reduced by 90%+ (from daily 200 searches to like 5).
And the AI response in the Google Search still has factual errors occasionally...
On the contrary, the ChatGPT has been doing great. The accuracy, recall, precision, or whatever metrics of ChatGPT exceeds Google Search by a large margin. Or close to or exceed what a human expert can do
[dead]
So if I understand it, search numbers are down (because AI is doing what Sam Altman originally saw - AI is a better search engine)
And Google knows it, so why not squeeze the current customers, whatever model AI takes it’s unlikely to be a word matching auction, this model is dead, grab the cash and go.
> search numbers are down
Source?
Google Search & other revenue grew 12% YoY in Q3 [1]. In that time paid clicks grew 8% and cost per click 4%.
Across the Google Network impressions fell 14%, with cost-per-impressions growing 14%. (9% of revenue.) But that’s on the web, not search.
[1] https://www.sec.gov/ix?doc=/Archives/edgar/data/1652044/0001...
Google has been trying to drop "Network" impressions (by moving them to Google owned properties) for close to two decades now.
The only revenue covered by Network is what it pays out to newspapers and other kinds of ad-supported websites.
Yes but search growth has slowed and it’s making less money thanks to AI overviews. An exec called it out in the earnings call.
https://arstechnica.com/gadgets/2026/10/google-admits-ai-sea...
I’ve been saying for a while that AI is going to be a bigger problem for Google than many realize: https://news.ycombinator.com/item?id=47957708
Search is not making less money, as the comment you're replying to just pointed out.
I should have been more precise, it depends on what you mean by "search" -- traditional search is still a huge cash cow, but AI search is not as lucrative, which is what the exec called out in that Ars link. The problem is that AI search is rapidly replacing traditional search.
Personally I have doubts that AI search would ever be as lucrative as traditional search, which I expanded on in that comment I linked.
Schindler said, according to Ars’ source, that “each AI Mode query currently makes less than a traditional search,” coupling “that with the claim that monetization will improve over time” [1]. Ars speculated that the slowdown to double-digit growth is “driven by more consumers using AI chatbots to find answers.” But none of that says Google is losing its user base.
I use Kagi and am skeptical of the debt-fuelled AI build-out. But 12% growth amidst a strategic pivot is unabashed good news. The stock sank because of the capital expenditure, not this.
[1] https://247wallst.com/investing/2026/10/29/google-admits-its...
Right, I don't necessarily think Google will lose its userbase -- although ChatGPT and Claude and heck, even Muse, are formidable threats -- but I do think its ability to monetize each user will drop sharply as users shift to AI search.
Like, in the theorycrafting in my comment that I linked before, I didn't assume any change in userbase; just how lucrative (or not) each step in a chat-based journey could be versus a search-based one.
search numbers are down as a percentage of total revenue, because cloud is up. search numbers are not actually down
This is it exactly. Search is steady while GC is growing by leaps and bounds because all AI iniatives require cloud for hardware and GC is a good option for anyone unhappy with AWS or Azure. The graph makes it clear.
Actually search still grew 12% yoy last quarter
The article says
Search revenue still grew: the share fell because the rest of Alphabet grew faster.
AI can definitely be a more natural experience for search, but it doesn't return better search results.
> but it doesn't return better search results.
It doesn't /inherently/ return better search results, but Google is many years into an intensive project to make their search results so bad that even a magic eight ball, let alone a moderately advanced AI, can do better.
It seems this way - however, it's not.
Google's organic search results are ranked by quality (including how many people click on them).
AI, generally thinks the best result is what's most common, or average, resulting in decent results, but not the best for what you're looking for.
We notice it when we're looking for a level of specificity google can hit, compared to an ai model. It's why Google's AI search can hit a bit differen too.
The example that comes to top of mind is a search that is not made for search rarely can compare to something as well as Perplexity.
> Google's organic search results are ranked by quality
What does this even mean? They're ranked by metrics that are assumed to be a proxy for quality, but (a) the accuracy of those proxies varies widely and (b) the ranks are relative; if a result is no longer in the response pool the fact that it would have been higher quality is invisible. Consider the year where anyone who's profile had been tagged as a software developer couldn't find any information on tost rings for sailplane towing because the "autocorrection" to toString was so strong that no mechanism besides logging out gave any relevant results; there's always crap like this going on.
Google makes a search engine for regular people. It used to make a search engine for engineers, but it has mostly killed that style of searching off.
"News oil prices trump iran" became "Why is gas 20 cents more today? Did something happen with Trump and Iran talks?"
This change even predates LLMs. Regular people were constantly sending queries like that 10+ years ago.
I have started to use the interactive Google summary chat, it's nice to have that initial search result context to follow up on with more questions
Google's AI search is different because they have the history of what right, and quality looks like, it's not just the most common webpages.
Yep, that's it. Search results are just such a bad example. AI just convinces you -falsely- it's results are good, but they suck.
It may or may. not try to convince anything.
Often when we use a search engine, we're trying to piece together something that might be across multiple links, or a single link
Nope. AI has no idea and no complete picture and just acts like it does. Search engines at least give you everything they have.
When I'm looking for info that requires careful parsing of a source site, then LLM is faster. If it's something like looking up the hours of a business googling that local business is better imo. Result is fast you get to see the business picture etc
Search is not analysis like you're describing.
Search has moved on from tf.idf + pagerank at this point. And absolutely they do use things like encoders to produce embeddings that are used in retrieval.
It's not about whether it moves on or not.
Google ranked the best results, not the most commonly occurring ones.
AI is by default returning the highest statistical percentage of what it thinks you are looking for in a response, which may or may not be a search result.
A fun example is having the AI run a search, and comparing it to perplexity, or even gemini a little. OpenAI is improving, and Claude is pretty consistently not made for comprehensive search.
Google search results are crap enough that someone only comparing them to various AIs may find the latter more natural.
Much funnier way of putting my same argument above:
https://youtube.com/shorts/zznrzSDptYU?si=sxbbmLkFbTs4C72W
Search numbers are down because Google search has become crap. I know a lot of people which I don't consider tech enthusiasts and they moved from Google to duckduckgo.
I have moved to Kagi myself
Search numbers were up on an absolute basis.
> AI is a better search engine
Google didn't exactly leave us much choice to opt out. I have to use a firefox extension to hide that bit.
AI doesn't really replace search engines, it's just a UX layer on top.
Yes, but google makes money from the ads all around the results, which I won't see if I'm using a Claude's UI.
Anthropic uses and pays for Brave Search. OpenAI uses Bing(perhaps) and their own crawler.
There have always been alternative search engines. People still use Google plenty and its AI Overview has gotten a lot better. Probably plenty good for most people.
> this model is dead, grab the cash and go.
[citations needed]
Pretty remarkable (in the age of AI) that search/ad revenue actually grew 12%. Anyone have a rational explanation why is that the case?
For me Google has stayed as the default interface, if I need to ask a basic query (probably searches that don't yield much revenue but keeps me on Google), the results were becoming worse a 1-3 years ago but now the AI parts of Google is now good-enough(TM) that I mostly don't need to go to a separate interface, as long as users aren't fleeing they can probably continue to get paid for ADs (also the if YT ads are included, those have really become obnoxious but probably well monetized).
But you are not clicking on ads? And they aren't (yet?) in AI overviews?
Not more than accidentally or when actually interested in something that pops up, but as a friend said, I'm not a usual core customer so I've never been the baseline.
The thing they're doing correctly right now imho, is that AI mode is mostly toggled for things that passes a quick questions filter (probably low probability of a purchase, like "global illumination methods" giving a decent overview of the field) while if you just type green shoes it'll put out an assortment of online and local shopping options.
Now if as someone said in the sibling comments, Google is gouging their customers with the new auction model that's another problem, but if I was a shareholder I'd be less worried about an exodus of end users to OpenAI,etc than I was a year ago.
I saw a post on X saying Google changed the ad auction pricing model, but I don’t know much about this to comment if it’s accurate.
This post? https://x.com/MaxAnderson/status/2080229375773941871
That post is shocking and probably deserves its own HackerNews discussion.
Thanks, this does make sense.
> that search/ad revenue actually grew 12%
it grew compared to q3 2025, but it is flat (0% grows) compared to q2 2026.
The money is mostly paid by companies wanting to find customers and the AI companies like OpenAi and Antropic don't provide much of that. The biggest competitor is probably Facebook who I'm not sure are really booming at the moment?
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Ironically, Google is likely more dependent on the success of Anthropic and OAI than they are on the success of Gemini.
They have an all you can eat buffet of cash from those two sitting right in front of them, but they can't build DC's fast enough to capture it. If that buffet dries up, the damage would probably be much worse then Gemini becoming non-competitive.
No they are not, why would you think that, they are bundling Gemini in their suite and millions of professionals use it as it's already part of their Gmail, docs, etc.
Literally all my non tech friends are writing Gemini gems or using notebooklm, with a minority on copilot.
Google has what all its competitors want desperately right now: 2 decades of data. That's their moat and where they will extract the most value as they increasingly lean into AI search results.
OpenAI and Anthropic can catch up, but first they must invent Google search, Google Maps, Gmail, Google Calendar, Youtube and Android.
i think that's why gemini output seems nicer to read. or i just hadn't seen enough of it since nobody uses gemini.
I maintain my own index of domains. It contains also youtube channels, and github repos.
I do use search engines, and chatbots, but when I need to find a tool, a project, a channel, it is just easier.
https://github.com/rumca-js/Internet-Places-Database
https://github.com/rumca-js/awesome-database-top - also a simplified, trimmed version of it
I don't rely on search engines that much any more.
What an awesome resource, really appreciate you sharing this.
Title makes it sound like Search shrunk, but it's rather everything else grew drastically, especially Cloud. This diversification is generally a good sign, but investors still seem to panic.
Humans are unsettled by fast, drastic changes since it generally signals uncertainty ahead. It's a caveman instinct signaling that someone needs to do much more to find the new normal or navigate some hardship.
Ah. So that’s before or after the 500bn haircut yesterday?
Google value plunges by $500bn as AI search hits ad sales
https://www.bbc.com/news/articles/cm9qzdqpxy48o
Alphabet shares down 13% today: https://www.cnbc.com/2026/10/29/alphabet-google-microsoft-ms...
Cloud and advertising is where the money is made for Google. This does not change with generative AI.
This article is missing the point. $GOOG didn't drop because search revenue is down. Search revenue, and revenue overall, actually grew. It dropped because the rate of growth is lower than expected, and the price of a stock is determined by how investors think the company will be worth a decade from now.
Makes me want to own the stock now that they are more diversified. I will never understand why they didn't want to own all of Waymo but did for pretty much everything else.
It reduces the risk if they have other investors. It's not really their core business and needs a lot of funding.
They still own ~80% of Waymo
Related:
Alphabet Announces Third Quarter 2026 Results [pdf]
https://news.ycombinator.com/item?id=50280197
How would you expect search forecasts to be met if most of the time you get "are you a robot" or clanker summaries if you are lucky.
Search no longer works and you are killing your most important product with AI that nobody wants. If search worked like in 2010, no one would use AI answers.
Anecdotally, I've stopped using Google search because of the captcha issue. It's a lot more work than using other search providers now.
This has been the plan for a long time.
I remember 10 years ago that Google was extremely paranoid about having the whole company propped up on one revenue tent-pole.
Where is AI in this?
Search was $63.4B "Everything else" was $64.2B, out of which GCP was $30.7B
Is AI on the 33.5B remaining post GCP? or within the 30.7 of GCP?
AI revenue is folded into both search and cloud, depending on what exactly it is.
So do you think this will be the continue trends of Google's search engine will be less portion of the company's revenue?
I haven't seen ads on google search in like 6 years because of blockers
Easy to forget that others still do.
Well they probably knew it all back in 2017 so I’m sure are very well prepared to pivot into whatever comes next.
But Ads is still 73% of their company revenue when you factor in YouTube.
YouTube did ~$60B in revenue last year.
Google cloud could've been more if they didn't drop the ball.
what ball? they're spending 100% of cashflow, taking out debt, and issuing stock. so they're not conservative on capital investment, they're growing at 103%.
You cant: 1) win the personal agent (requires a vm for every user) 2) win cloud sales (requires selling your compute) 3) win model war (requires using your compute) 4) win the chip war (requires selling your tpu's themselvs)
Weirdly enough their issue is they're to small to fight every battle, MSFT+Nvidia+Meta+Oai+oracle is like 14T in market cap.
Looks like a good buying opportunity for GOOG. Just bought 7 shares.
The fact that this was ever more than half should make us extremely suspicious of the whole search engine. Almost all of that money is coming from paid manipulation of search results.
Cloud computing is really a money printer right now. Amazon makes more from AWS than from their retail business, it's nearly 2/3rds of their profit.
I mean that's been the case for like a decade (maybe not 2/3rds but AWS eclipses amazon.com long ago)
Retail is just a bad business. The ad business is many times more profitable than cloud business because of the margins. Cloud isn’t a money printer when compared to advertising.
Google Search sucks nowadays.
What is even stranger, though, is ... the alternatives suck even more.
I don't know where to even start. Take qwant. Well, first check they do is "are you a bot". That's wasting my time. I am not a bot. But, while this may be a minor annoyance, qwant also yields crap results. It does, however had, which is quite interesting, also yield results that Google search does not yield. I had some good results here with regards to images. But in general, searching the www for useful information, really took a dive in the last 5-10 years. And a HUGE dive. Many people noticed this. There are tons of webpages pointing this out. And videos on youtube too (owned by Google, the monster that ruined its search engine).
I am surprised google search still yields any money to Google, considering how crap it has become. In the past I could even read webforum entries in behind the "you must be logged in". I did this, for instance, on a text-based MUD I retired from many years before that, but I was still curious what kind of changes they made. Then google removed that feature - and many more - deliberately. That was when Google decided to cripple its search engine. Then came AI slop and slop-degraded the remaining rest. The nuclear slop holocaust eradicating useful information. Thankfully Wikipedia still exists, and while it has several issues, quality-wise it is a blessing compared to what we typically see nowadays.
Gemini is terrible, it's trash especially after downgrading to the free version. I have to prompt it two to three times for it to understand what I am asking it. It seemed better when I was paying for it while it's free competitor models (the other 4) always answer me right away.
AFAIK only gemini can retrieve youtube videos (chatgpt free cannot and claude IIRC cannot, plus claude do not have native video processing).
So if you need tl;dw or something to do with YouTube video, gemini is the most seamless
They can just fine (well, probably not the "ChatGPT free" interface, that thing can not do anything). It might just not go through a Google API.
Also, of course, before anyone even realized the game was on at Google, Anthropic and OpenAI already downloaded the entirety of YouTube.
>downloaded the entirety of YouTube
Sure thing, buddy.
you're not really the ideal customer. They're probably going to market to enterprise people because Claude/ChatGPT will become too expensive when they IPO and won't have any other revenue stream unlike Google/MS.
ding ding ding, I cannot see right now anyone else "winning" AI... I hope for a local future where this doesn't happen but otherwise... yeah
Great, now they won't mind so much when we break Search out of Alphabet, because it's a monopoly... :D
There's nothing intrinsic about Google search that makes it a monopoly. Monopolies usually hold their position because regulations make it prohibitive for competitors to form or because they control a rare resource. Google search does neither of these two things. Its just a better product compared to everything else out there and the market reflects that.
Do they control the Trademark "Google"? Do they control the Domain Name "Google.com"?
Do they control the default Search engine for Android? For Chrome?
Did they pay to be the default Search engine on iPhone? On Firefox?
Are those rare resources? I'd say yes.
And you're conflating "illegally-maintained Monopoly" with "Monopoly." Whether they got there through using illegal tactics or not is a separate question from whether they are a Monopoly now. 90% - is that a high enough market share to qualify as a monopoly, when their annual revenue is like $224 billion? What percentage would be enough to convince you? Does it need to be 100%?
You forgot to exclude the "not usual" factors that allow monopolies to hold their position to rule Google out of the group.
For example, non-regulatory attempts at blocking of competitors, which Google does engage in due to their dominant position in mobile (of course, that's also just another better product)
Monopolies hold because companies engage in foul play to hold their monopolies. When Google goes out and pays Apple billions to default to Google Search, that is not a regulatory hurdle, nor is Google using its position as the Android platform maintainer and bundling Google Search with Play Services.
How is that foul play? Companies pay other companies to be the exclusive X all the time. For example, Coca-Cola bought an exclusive right to the only soft drink brand at all Fifa games. There are other examples like Nike being the official uniform of the NFL (including fan purchases), Windows paying computer manufacturers to be the default OS on PCs, and Netflix paying TV makers to have a Netflix button on the remotes for the TVs.
I'm really torn between these two perspectives. You are not wrong about monopolies. And yet, when Google and Apple struck that deal I thought, thank god I will not be forced into using whatever Apple has to offer up as a search product.
¿Por qué no los dos?
You can have shady corporate behavior and regulatory practices enabling each other.
The query logs and “permission” to crawl are both advantages vs startups.
You can't legally make a crawler to compete with Google anymore, it's explicitly stated in a lot of robots.txt's.
A rational take, prepare to get downvoted to oblivion!
"Search" is a borderline obsolete concept. There is no separation between search, AI, information retrieval, knowledge synthesis, information tasks, etc.
On the path to being cancelled!! /s