Comment by jacobgold
10 hours ago
Someone who has spent $100M+ on Google Ads explained to me that Google is doing everything possible to juice their revenue right now, in ways they've never seen before.
Seems like two things 1) Google is losing at AI and Sundar wants to mask this 2) AI is going to destroy their ad business and they want to get while the getting is good.
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…
They can be doing fine at AI models but not so well with AI revenue.
Although I am curious if they are not worried and playing the long game confident that their distribution will eventually help them catch up (and worst case they own some of Anthropic). But obviously Anthropic and OpenAI have their own distribution now too.
> but not so well with AI revenue
Nobody is doing well enough with AI revenue ATM (https://isaiprofitable.com/). At the moment it is probably more about market share of users, that is where the investment capital will need to be clawed back from when it starts to be called back (or replacement money will need to come from if the investment cycle simply stops giving generously).
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I do wonder if the more they goose their ad business the faster it eventually falls. I know I am more and more reluctant to view many normal Web page ads at all and usually immediately click away the second a site gets annoying
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The other companies are stealing people's work for headlines and sabotaging each other. Google is offering a whole bunch of Gemini APIs that do real shit, with the same terms and contracts and the existing products for most of them.
A large chunk of the population don't use Google to search anymore. They go straight for the GenAIs. That's got to be scaring a lot of managerial folks at Google.
The Gen AIs are doing the search for people. So hopefully this forces google to switch their business model from manipulative ads against human users to just charging for API access for Gen AI models.
Slide 65 of this (very nice) set of slides [1] broke down search vs genAI use to get information. "Mostly genAI was not breaking 25% in all age brackets... Curious to see how that will evolve
[1] https://readwise-assets.s3.amazonaws.com/media/wisereads/art...
truly Google's on fault. Their results have been shit for at least 2 years now
They also invented the whole big data Ai industry, and managed to become a second tier company there. So…
By what measure? Alphabet just reported another blowout quarter for Google Cloud — revenue jumped 82% year-over-year to $24.8 billion.
I think Google's big bet (and Microsoft's before them) is in centralization of AI services, hosted using their model, and that AI at the edge will always be a bit player.
But what I see and hear from technical consumers, businesses, and govts is that they would prefer their data stay local, and like the idea of edge compute being used for AI.
Claude/OpenAI's direction with their Apps enabling deeper integration is a good direction, but the trust with data is still a growing concern. OpenAI's math actions on the NS problem degrades their reputation a lot.
>> I think the 3.8 Flash release shows they are doing just fine at AI.
If you use it for even 15 minutes you will see this is not true. At all.
It's not about releasing models. Consumer market share of chatgpt is still >60%, if not more. Their search engine was hit and as soon as product search starts declining on Google this will be a code red. They're in an extreme nicle and dime mode.
Google’s cash cow is ads. I think the writing on the wall is ChatGPT and other AI search engines will dominate. It is to be seen how Google will respond. But in the end, their monopoly on web search is coming to an end.
open router isn't the whole market, but open router shows google is struggling for market share in the limited window we can see
Openrouter isn't even 00.01% of tokens used on a daily basis. China alone uses 500 Trillion tokens a day and they're only 1/8th of the world. Much of the world has a google account, use your brain.
How are they going to generate revenue if their old model is Ads on search and the new model is yet to show how revenue can be generated. ChatGPT (on free) is showing ads now but they are not targeted and I highly doubt they are worth anything.
Alphabet just reported another blowout quarter for Google Cloud — revenue jumped 82% year-over-year to $24.8 billion
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very HN take. Reality is 3.8 flash is good at what it does (being fast + cheap)... but that market is becoming very saturated and google is not competing at all at the frontier where major spend lies.
So just ignore the reality, that Gemini (and yes even 3.8 Flash) is worst of all major LLMs across most metrics? But that's fine, because reasons?
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>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 am having this issue getting approved, and Google denies me every time. I last tried back in August.
Yeah they accept websites without content nowadays, which I think should be the case either way.
What is not okay is them pushing a huge amount of ads into website, constantly asking you to enable auto-ads and vignette ads and what-not.
While this says nothing about Google as a company, I am sure AdSense is feeling the same pain as everybody else which livelihood depends on page views - just n orders of magnitudes bigger. So it would not surprise me if they were scraping the bottom of the barrel, so to speak, for any revenue opportunity.
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.
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.
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.
My understanding was that the Ad business was starting to suffer because of how much bot activity there's been both in social media and indexed search (Google).
But I wouldn't write off ads yet. It seems plausible to me that LLMs will be able to slightly alter their output to casually mention paying brands and to profile users better than we could before.
> To me this is about the slow death of display advertising.
That's good. I hate ads. I will fight them down until they are gone.
But I don't think this is the case here. Ads are still pushed down onto the people willy-nilly style.
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.
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