The impending death of Google…or maybe not.

Alphabet is dealing with some major issues at the moment which is creating a growing sentiment that google is ‘doomed’.

This is because (namely):

1. OpenAI et al are going to steal the search industry

2. Alphabet will suffer as it’s different businesses are forced to break up

3. Apple will likely not (or cannot) continue to use Google as its default browser for Safari (despite Google paying $20bn a year for the privilege)

Alphabet’s valuation has plummeted 9% in the last few days due to some/all of these points. 

However, we and our clients in sports and media rely on google as much as ever.

Reasons why Google is going nowhere…

First, revenue from Google search is still growing; despite the explosion of Chat GPT – Google still registers x353 times more search queries per day.

Second, we all know AI is going to have a huge influence on search and the way information is prioritised and presented. However the idea that Google will not be at the forefront of this seems dubious(?) They are making huge investments in this area (namely Gemini) and (we find) is already superior in some key aspects due to the data and infrastructure they can call upon.

Bear in mind also, an issue newer AI search models will likely run into is a problem Google’s AI team has already been tackling for some time – where do you find a flow of non-AI generated content to continue to update and train your systems? AI trained on AI (or synthetic data) runs the risk of becoming detached from day to day life and events.

Google however, has already got an agreement in place with #Reddit to help with this after search engines were flooded with AI content, however, there are only so many of these ‘human centric’ sources available to competitors.

Further to this point, it is Alphabet’s range of products and integration with the wider ecosystem which really sets it apart – #youtube is the second biggest search engine in its own right and incredibly difficult for another company to compete with or attempt to replicate. This is another huge significant and rich data source that sits within the Alphabet structure. 

Waymo, as another example, is well placed to thrive in the next few years. 

This is before we even get into the huge advert and analytics infrastructure relied on by millions of companies that google provides.

The damage limitation that will result from the break up of Alphabet has also been a strong narrative up to now – however this is not so clear cut.

It is often the case that the separation of these businesses can (and will) unlock new value. As these businesses split out, each will enjoy a freedom to prioritise and innovate in an increasingly targeted way – they may well get better. (See #Paypal x #Ebay).

I tend to share the opinion that Alphabet is, right now, grossly undervalued – it is not going anywhere. Certainly not in the short to mid term.