Google is moving fast again — but big problems cloud its path

When ChatGPT arrived, much was made of why Google wasn't the company behind it.

The search giant, after all, owned the world-beating AI lab DeepMind, released the research paper that laid the foundation for the large language model behind OpenAI's chatbot, and was putting its deep pockets to use for AI development. Some thought that if any company was going to be the first to present generative AI in a neat, consumer-ready package, it should have been Google.

The company may have gotten in its own way. It became a classic case of what the business guru Clayton Christensen described in 1997 as "the innovator's dilemma," in which an incumbent becomes complacent and cedes ground to younger companies with fresher ideas.

But Google has been determined to remind everyone of its ability to move fast and innovate; the launch event for its AI-infused Pixel devices was its latest attempt to do just that.

During Tuesday's Made by Google event, brought forward from October, the company showcased the latest capabilities of its Gemini generative-AI system across new Pixel smartphones, a smartwatch, and earbuds.

Capturing imaginations

One standout feature was an "add me" function allowing users to add themselves to a photo they aren't in by taking another picture of themselves in that photo's location and then combining them with AI.

Ben Wood, the chief analyst at CCS Insight, said he expected the feature to "capture consumers' imaginations," describing the photo and video capabilities shown off on Tuesday as among "some of the most compelling AI-powered innovations."

Google, of course, remains far off rivals like Apple and Samsung in hardware: Pixel sales are a fraction of the revenue generated by iPhones and Galaxy devices.

But after the devices boss Rick Osterloh took charge of a newly created division earlier this year combining its Android and hardware teams, the company had a fresh medium through which it could demonstrate Gemini's uses and advantages.

Put differently, Google has a chance to show that it's doing what critics said it wasn't doing back when the release of ChatGPT triggered a code-red warning internally: It's moving fast again.

What seems less certain than ever is its destination.

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Which way, Google?

While the company is racing to innovate in AI, it's facing several challenges that cast uncertainty about where it'll end up.

This month, a US federal judge ruled in a 286-page judgment that the company not only was a monopolist but had "acted as one," handing it a brutal result in an antitrust case brought by the Department of Justice four years ago.

A Bloomberg report published Tuesday said one drastic remedy could involve breaking up the company, with "the most likely units for divestment" being Android and Chrome.

Search remedy

Lawmakers failed to split Microsoft into two separate entities following a blockbuster antitrust case in the 1990s in which the Windows maker was also tagged as a monopolist, so it's unclear how much success they'd have trying to break up Google.

But Google will be asked to loosen its grip on the tech sector. Another possible remedy, according to my colleague Alistair Barr, is making Google's search index publicly available.

Beyond its battle in court, the company has been having a hard time convincing investors that its fancy AI developments will generate returns.

After reporting earnings last month, the company struggled to convince investors that returns are on the horizon as it doubles down on the spending needed to fuel its AI: Its capital expenditures almost doubled year over year in the quarter, to $13 billion.

Investors haven't been kind in return. In the past month, Google's stock has dropped by almost 12%.

So yes, Google is moving fast again. Just don't be so sure about where it's going.