I think the 3.8 Flash release shows they are doing just fine at AI. Unlike OpenAI and Anthropomorphic, Google doesn’t have to release new models to capture VC sentiment every three months. They have the hardware, data and money. And when they release a model it’s very good.

Now their product strategy however…

This behavior predates modern AI. Maybe it’s getting worse, but without high limits (which lower revenue) adsense will result in a lot of scams.

>Google is doing everything possible to juice their revenue right now, in ways they've never seen before

My experience confirms this: many years ago I had a website banned from serving Google Ads. They said my pages didn't have enough content.

Then a competitor started showing ads on the exact same type of pages where I had previously been able to serve them. So I tried getting my website approved again and -- surprise -- now I can serve ads again.

I think the reality is more a twist on 2): "AI is going to destroy their ad business and they want to goose their revenues while they can, hoping their AI business can compensate, but they know the AI business will never be as lucrative as the ad business."

Firstly, try to imagine stuffing as many ads as there are on a SERP into a chatbot conversation. Good way to lose users.

Secondly, Google spent decades hyper-optimizing their ad business monopoly for maximum profit, including going to extents that were recently found unlawful. People should really look into the findings of the last two Antitrust cases against Google, both of which it lost but for which it suffered only slaps on wrists. The details are eye-opening, including the bits about how Google, leveraging its prime position as the middle-man playing all sides against each other, manipulated ad auctions to make itself more money at the expense of its customers.

Even Microsoft was dinged for screwing over just their competitors, not their customers.

But now because of the paradigm shift in how people discover information, very little of the Google ad monoploy advantage transfers over. I think their AI business will keep growing, even if they don't have the best models, and it will be an exceptional source of revenue.

But it will still be no match to their ad business -- a cash cow of incomprehensible proportions -- and that is the fundamental problem they face today.

Why would Google be losing at AI, they're SOTA. They have all the users.

There's zero chance that AI destroys their ad business. I get served ads from Amazon in podcast RSS feeds that were directly derived from things I said in Gemini chats. It's definitely not destroying ads lol

I'm surprised by the weird levels of incompetence on this website, use your brain or have you already hawked that off to your favorite AI lab.

everyone (on all sides!) is losing at AI and we'll see increasingly frantic attempts from all players to paper over the cracks as this extreme resource misallocation bites.

I don't think it's related to AI, at least not originally. To me this is about the slow death of display advertising. The arms race of ad blockers and ad blocker blockers and such has created a world where people hate display ads, especially because they require so much creepy data to even work in the first place.

AI probably would help their display ad business overall -- they finally just launched a "have Gemini create your ad!" feature, and I imagine having to hire a designer was a common blocker for SMBs.

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