Google is doing what the street wants, which is a proxy for shareholders. The increase in ads revenue, the first ever dividends, and the layoffs. These are the tools that the leadership have, and mostly short-term. The long-term innovations haven’t really taken hold. So, this may be the flame burning the brightest before it goes out.
They still have one of the best AI tech now and for the foreseeable future (despite their woke filters) and a decent cloud platform. And of course as you say they have Ads but also Android. I do feel like they could do 100x better but I think they're still relevant innovation wise (and financially obviously).
They certainly have a ton of relevant technology and product. But, much of that hasn’t taken hold — translated into large ever-growing, profitable businesses. Android, Chrome, etc are all mechanisms for their ads business and are not new innovations. AI is definitely new, but the jury is out.
While the cloud is an asset, I believe that it’s not innovative. Google Cloud is a distant third — they’re largely following. It exists because clouds require a certain scale and completeness, and they have the money to invest. Again, the jury is still out here.
There are plenty of customers using Google Cloud. It made $9.6B last quarter, that’s 28% increase from the prior year, and operating margin of 9.4%. In contrast, AWS made $24.2B, with 13% growth, and operating margin of 30%.
The point is that Google is buying the growth, which eventually runs out. While that’s a reasonable business strategy — it’s not the same as innovating a new business.
Bell Labs, HP Labs, IBM, and some other tech companies also had some of the best tech from their times. They couldn't execute good products out of it and eventually fizzled out. Perhaps that's what we are witnessing with Google.
People have been saying that about Microsoft for ages but it keeps growing and chugging along. I use a minimum of 7 Google products everyday, they came up with all of the research for LLMs, they have the only self driving car that actually works, run the largest smartphone OS in the world by a mile etc. They’re not going anywhere.
Microsoft has built an Enterprise business that has too many lock-ins (Active Directory, Office specially Excel), that even if they make many missteps the business will keep pumping money, and makes it easy to sell new products to the same audience (Azure/teams). Enterprise companies run very very long even when they decline (IBM/Oracle).
Google's ad business while printing cash is very brittle. Consumer taste can change any day and can cause Google to suddenly look at some big percentage drop. Ad is still the only moneymaker of the company. All the products you listed above are not making money, most money comes via search ads (which Android surely helps to), and that can go the way of Altavista due to several reasons (people moving to chatbots, iOS changing default or allowing new engines, regulators forcing chrome/android to randomize default).
