Google’s Next Battle - AI, Gemini & Customer Happiness

Google’s Secret → Habitual Product, Slow AI Timing & Narrative Builds. 

In Tuesday’s quarterly earnings call Alphabet CEO Sundar Pichai said:

“Gemini is making Google's own products better.  All 6 of our products with more than 2B monthly users now use Gemini.  This means that Google is the company that's truly bringing AI to everyone”. 

This was a smart comms line.

This statement was made for shareholders and investors to buy into their AI push and ignore the stories coming out of the internal team cultural battles and reduce the friction around Google’s less flashy approach to AI and right now a slight let-down in terms of features and improvements for paying customers. 

What Google is doing well is pushing the narrative that their AI product is the first to be in consumers’ and corporate customer’s lives to send a shot across the bow to Apple (who were the first to embed this from their recent event with their Apple AI partnership approach). Android vs iOS is going to be a long battle especially in the next device to replace smartphones and in AI space, which might blend into one…

Google Wins Are Potentially Google’s Next Big Issue:
What many tend to miss is the incredible results (Alphabet reported $84.7bn in revenue with $24 Billion quarterly profit, from an incredibly strong Search (ads business) and Cloud revenues) Google and competitors can win have arguably declining products: Google’s example is their organic search product (their SERPs are an absolute mess right now) and increasing Google Workspace & Google Cloud pricing for no extra customer benefits, while benefiting from increased ad pricing and ad placements. 

Battle 1 Alphabet’s share price dropped Wednesday reacting to the market news and slow adoption in AI, one major concern is failed cloud acquisitions in HubSpot and now Wiz.

But Time Is On Their Side: Google, Apple and Amazon’s secret is almost always timing, especially with AI and not rushing into AI - this is going to win the mass market for them while others rush, crash and burn. 

Battle 2 Google’s Ask Fatigue & Friction: Google’s asks from customers will lead to ask fatigue and churn, asks will continue to increase, Google will continue to ask for more budget from advertisers with different targeting (soon to be less opaque) options, more company to upgrade users to Gemini AI and ask consumers to pay for more storage for Gmail use.

If you have ever worked inside of a big company or a listed company you have core workstreams (projects that take company-wide priority) and internal politically driven decisions that to the outside don’t make much sense. If your workstream (say organic search or improving Google Workspace features) doesn’t make the OKR sign off it won’t have any resource assigned or budget for quarters ahead.

Google’s next battle is how to improve their search results (away from optimising the number of ads) while facing competition from answer engines like ChatGPT, Claude and Perplexity and cramming in more ads at increasing prices to keep investors happy. 

Here’s a good graphic via Reddit for Alphabet’s results last quarter - take a look at traffic acquisition costs $13.8b — paying for defaults on iPhones and Samsung devices is not cheap.

>> Are you a heavy Google Workspace user? Here are my favourite Google Workspace shortcuts and hacks to improve your productivity