What If Google Goes on Offense?

Last week I asked if Google was f*cked, and since then quite a few of you have reached out asking what I think the company could do to … un-f*ck itself. “Easy enough to declare the company is too big, too stuck in the mud, too cautious, too dependent on its cash cow,” you told me. “Much harder to advise them on what to do about it.” One of you just sighed to me on the phone, then said “it’s always been this way. No large company can escape the innovator’s dilemma.”

Well, maybe so, but wouldn’t it be fun to try? I’ve been in touch with various Googlers over the past few weeks, as I’m still working on a “What should the ads look like” piece around ChatGPT and AI-driven search (promise, it’ll be done soon). While folks at Google are polite and engaged, they’ve also given me the extended play version of “No comment” – stating it’s too early to declare the business model for conversational search. In short,  they’re waiting for the market to reveal itself a bit more before making any public statements or declaring themselves all in on tech’s next big trend.

All of that makes perfect sense, if you’re in protect-and-defend mode. Protect your cash cow, defend your market position. But I find myself wondering – what would it look like if Google went on offense?

Protect and defend, spin and let jazz hands fly – that was the order of the day when Google announced its Q4 2022 earnings to Wall Street earlier this month, and when it “announced” Google Bard during a search event in Paris one week later. Google had endured a lot of bad news in the past three months – OpenAI let ChatGPT off the leash and announced a much deeper partnership with Microsoft, Google laid off 12,000 staff – its largest cut ever – and fourth quarter advertising revenues tanked. That’s plenty of ugly headlines, but then Microsoft announced Bing Chat just one week later.

So it’s understandable that the company’s tone on its Q4 earnings call was defensive. “The macroeconomic climate has become more challenging,” began CEO Sundar Pichai, before turning to an anecdote that allayed exactly no one’s concerns. “We continue to have an extraordinary business, and provide immensely valuable services for people and our partners. For example, during the World Cup Final on December 18, Google Search saw its highest query-per-second volume of all time.”

Ummm, OK, but what are you doing about Microsoft and OpenAI? Pichai and his lieutenants gamely danced around that question, never really addressing it head on. AI was at the center of the earnings call – Google has plenty of credibility in the space – but the company was deeply cautious about committing to any particular product or revenue projections. “Very soon,” Pichai promised, “people will be able to interact directly with our newest, most powerful language models as a companion to Search in experimental and innovative ways. Stay tuned.”

Stay tuned? It’s been nearly four weeks since that statement. And it’s been three weeks since Google rushed out a vapory version of Bard – which the press immediately declared a broken play. I defended Google at the time – given the hallucinations of Microsoft’s initial product release, I wrote, perhaps it was right of Google to wait.

And “wait and see” was certainly the headline of Google’s earnings call. Here’s Pichai again, responding to a question about how Google will bring AI into its products: “We’ll be careful. We’ll be launching more as Labs products in certain cases, beta features in certain cases, and just slowly scaling up from there…So I view it as very, very early days…”

Sober, careful words. Exactly what you might expect from a company not willing to risk their current market dominance. But compare those words to those of Microsoft CEO Satya Nadella. During his earnings call one week prior, Nadella declared that Microsoft was turning “the world’s most advanced AI models into a new computing platform.” In the subsequent weeks, Microsoft hasn’t shut up about how AI is going to change everything. “It’s a new day in search,” Nadella declared at his search event on February 7th, in the process capturing not only the high ground of tech’s next big thing, but also leaving Google – the company that invented modern search – looking like an also ran.

All the while Google has remained quiet – perhaps hoping Bing Chat plays out as a short term trend, and that Wall Street’s love affair with Microsoft will prove the same. For the past two weeks I’ve agreed with that strategy. But I’ve changed my mind. I think it’s time for Google to stomp on the gas pedal – Wall Street be damned.

Here’s why: I think chat-based search is the first step toward a major shift in how we all will interact with the world, and the company that wins that shift will reap unimaginable rewards. Now is not the time to wait and see. Now is the time to declare leadership, to experiment, to learn, to fail quickly, and to iterate. In other words, now is the time to do what every developer using OpenAI’s API is already doing – to start learning what every engineer and product manager at Bing Chat is already learning. It’s time to push something out to market, it’s time to declare yourself the leader in this new market, and it’s time to lay out a vision for what the future of computing will look like.

That vision is still poorly defined, but it’s coming. The consumer experience of ChatGPT, Google Bard, or Bing Chat is fundamentally distinct from how search works today. Traditional search’s prime directive is to convert the user as quickly as possible – to deliver the right site, the right ad, or the right link for a consumer to click. Beyond that, the goal is to deliver revenue as quickly as possible to Google’s coffers – hence the development of the One Box or vertical models like Flights or Maps. Anything that gets in the way of those goals is death to search’s core business model. There’s a reason a search service never pops up a refining dialog box to ask “Wait, did you mean….?” Roughly 50 percent of search users will abandon a query if they don’t get the right result after just one prompt. For 25 years, Google’s been optimized to perform one task: Get an answer quickly, and make money doing it.

The interface model for ChatGPT-like services is quite literally the opposite of this approach. Consumers approach the service in conversational mode, honing queries and exploring concepts through informal dialog. The goal isn’t to immediately take action – it’s to find something out. Yes, actions can be taken afterwards (and there’s money to be made there, more on that in the next post), but the big shift is that we’re literally talking to the computer, and the damn thing is actually making sense when it talks back to us. That changes everything – not only what we say (the queries), but also what we expect when we approach the service in the first place. While Microsoft is already pitching blue paid links to agencies, there’s absolutely no way search’s current monetization strategies are going to work in the context of this kind of service.

When you think about it that way, it becomes clear that Google is locked in a race to pioneer an entirely novel consumer behavior that will soon be at super scale. This is a massive market redefinition, one the company has every right to win. Google has already trained hundreds of millions of us to talk to our phones through voice search. Yes, its Google Home and Google Assistant products have languished, but that’s because they haven’t given us a reason  to change our expectations of what a computing device should be able to do. Chat-based interfaces will change all that. Can Google really afford to play catch up when this wave starts to break?

But wait, a more sober mind might object, Google has to play it safe. Who knows what might go wrong? Google can’t afford to risk its reputation on unknowns (actually, Rob Reid knows…). Not to mention Google’s core search business is fundamentally threatened by chat-based search – it can’t afford to train a new generation of users on a product that has no monetization strategy.

To all these objections I say nonsense. Google must take these risks – it can’t afford to cede its leadership to startups and competitors like Microsoft who have little to lose. This is the moment to be bold. As for reputation, it’s not like Google’s going to turn off its legacy search product when it launches something like Bard – consumers (and even the press) understand the difference between “beta” and a long-trusted experience.

And that monetization objection? Ignore it. At an Industry Standard conference in 1999, early Google investor and legendary venture capitalist John Doerr was asked how Google was going to make money.  I remember him regarding his questioner incredulously. He pointed out how quickly search was taking over the computing landscape, how quickly Google had taken the lead, and quipped “with all that traffic, we’ll figure it out.” Eighteen months later, Google launched AdWords. Imagine if they had waited until they figured out how to make money before launching Google Search?

I’ve no doubt monetization will come – but in the meantime, get the product right. And to do that, you have to be in market, leading with both vision and action. Google’s original cash cow isn’t going anywhere, it’s provided the company with hundreds of billions of dollars in cash reserves and a trusted brand that billions of people use. It’s time to spend some of that capital – and once again, figure out the future in real time.

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