Sundar Pichai Is Google’s AI ‘Wartime CEO’ After All

(Bloomberg Opinion) — There was a time everyone seemed to have a take on why Open AI’s ChatGPT beat Google to market in November 2022. 

One view was that Alphabet Inc.’s bloated company culture had held it back and made it too touchy-feely for cutthroat competition. Another was that protectionism over Google’s advertising revenue had curbed the company’s ambition, creating a “code red” moment that left it vulnerable to disruption, even destruction. Some questioned whether Sundar Pichai, the company’s soft-spoken leader, possessed the ruthlessness to be the “wartime CEO” Google needed. 

That talk has disappeared of late. Alphabet is the strongest performer in the so-called Magnificent Seven stocks this year, beating even Nvidia Corp. The credit for that lies with the man at the top.

Pichai’s leadership is why the arrival of ChatGPT can be seen as Google’s “Pearl Harbor moment” — not the beginning of the end but the clarifying moment at which, after a period of costly indecision, it became clear the company had to commit fully to the AI race. Pichai took the decisive step to restructure the company to give more power to the brightest AI mind he had at his disposal, DeepMind founder Demis Hassabis. Lesser CEOs would have seen Hassabis as a threat; Pichai harnessed him as his best asset.

For sure, faced with the threat of ChatGPT, Pichai’s first moves were defensive flops. The launch of Bard — later renamed Gemini — was hurried, even making mistakes in its launch demonstration. A Bloomberg report at the time described how Google’s own employees felt about their efforts: “A pathological liar,” one worker said about the chatbot. “Cringe-worthy” and “worse than useless” others said. Later, Pichai would be left extremely embarrassed when Google’s experimental AI image generator generated pictures of the American Founding Fathers as Black men — catnip for those looking for any excuse to call AI “woke.”

The even bigger fear at the time was that Google had blown its early work in AI in the cloud and would suffer at the hands of Microsoft Corp.’s deal with OpenAI, while Amazon Web Services, already the market leader, could forge partnerships to cement its strengths, too. In the consumer sector, worries arose that AI chatbots would eat in to what we now think of as “traditional” web searches, taking with it the billions of dollars of advertising revenue that formed the foundation of Google’s business.

Those concerns didn’t pan out. Under Pichai’s careful watch, Google Cloud just enjoyed its second consecutive quarter of 30% year-on-year growth, fueled by the close integration of Google’s cloud expertise, AI credentials and own hardware: Its custom AI chips are being eagerly adopted as a cheaper and more readily available alternative to those made by Nvidia — Anthropic just pledged to use 1 million of them.

Far from cannibalizing Google’s legacy business, AI has expanded it. According to the company’s most recent earnings report, quarterly search advertising grew 15% to $56.6 billion, helped by (controversial) AI-enhanced features like AI Overviews and AI Mode. There are now 650 million monthly active users of its Gemini AI app, whose use has been bolstered by the introduction of the image generator “Nano Banana,” which has proved particularly popular with a younger demographic, Google said, with more than 5 billion images generated. More than 230 million videos have been generated using Veo 3. That’s to say nothing of Google’s locked-in presence in education, where thanks to its years of rolling out Chromebooks in schools, it now has the chance to capture new AI users from the very earliest stages of computer use (though again, not without controversy).

Working in Pichai’s favor, there’s a lot more in Google’s AI arsenal than some had given it credit for, built on data far more difficult to acquire than the kind indiscriminately scraped from the internet to power other AI models. Google has yet to put on full display how it might combine its huge array of services — Maps, Gmail, office productivity tools, YouTube — to offer a personal assistant with a depth of knowledge about users that no other company could possibly match. Given the green light by the courts, Google is only just bringing AI features to its market leading Chrome browser, a gateway its competitors are desperate to emulate. Google has already rolled out AI features to its Android mobile platform. Soon, Apple’s Siri assistant may be powered by Google, too. 

When some worry about the return on investment, the avenues for Google to make money are obvious. Think of the world in which a Google user asks Gemini for a good movie recommendation: Google AI cribs the latest reviews, shows a trailer from YouTube, discovers showtimes through Fandango, pays for tickets with Google Pay and invites friends to join by Gmail. Google’s AI voice can call a restaurant it knows the user will probably like based on past visits and reserve a table knowing how long the movie will last and how long it will take to get there in traffic. A Waymo car will be dispatched automatically to pick the user up and drop him home afterward.

Other AI companies talk of new partnerships and future use cases. These are capabilities Google possesses today built over decades of making sense of the world’s information. All Pichai has to do is to manage the delicate process of integrating them. If he can accomplish it, it will take something truly seismic to beat Google at consumer AI.

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This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Dave Lee is Bloomberg Opinion’s US technology columnist. He was previously a correspondent for the Financial Times and BBC News.

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