Google seeks to guard its flanks with AI tools

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HDFC, e-commerce platform Myntra and insurance firm Tata AIG are among Indian companies using these tools, he said. “We see it as an enhancement, and a tool to exponentially increase the opportunity to reach consumers with relevant ads, to reach consumers with a relevant experience on their website," Taylor said. Industry stakeholders sees the move as Google’s attempt to protect its revenue in the long run.

Digital ad spending growth has slumped—GroupM expects global digital ad spending growth to fall 1.5 percentage points to 5.9% in 2023 to $856 billion. This is particularly concerning for Google, which relies heavily on ads. Out of Alphabet’s latest quarterly revenue of $74.6 billion, $58.1 billion, or nearly 78%, came from ads.

Its FY22 annual report disclosed ad revenue of $224.4 billion, accounting for 79% of its total $282.8 billion revenue. Jaspreet Bindra, founder of tech consultancy firm Tech Whisperer and an industry veteran, terms Google’s approach to generative AI as a “classical innovator’s dilemma". “Google invented the foundational transformer model in 2017, but then sat on it without being the first to commercialize, as it posed a direct threat to Google’s vast ad business.

It is this that Microsoft also targeted—the advent of generative AI will basically cut down the margins of the massive-margin ads business that Google dominates. At present, Google’s biggest challenge will be to see how it can monetize this new format of search that generative AI has brought forth, through ads. It is this that Google will look to address, in a bid to maintain the margins of its primary revenue driver," Bindra said.