Alphabet’s Challenge: Monetizing Generative AI

Alphabet, the parent company of Google, has embraced generative artificial intelligence (AI) across its various products and services. However, it faces the challenge of figuring out how to effectively monetize this technology.

OpenAI actually beat Google to the punch by releasing the first consumer-facing chatbot powered by generative AI. Although Google’s AI team was once the envy of the tech community, it was researchers at the company who initially developed the algorithmic design that underpins the generative AI boom.

Google’s chatbot, called LaMDA, possesses impressive dialogue skills. However, the company was hesitant to release it due to concerns about inaccurate or biased responses. Despite this, Google has unleashed a wave of AI-powered product releases throughout 2021, including its ChatGPT competitor, Bard, as well as Workspace writing assistant functions, Vertex A.I. environment, and updates to Gmail, Google Maps, and photo editing.

While Google’s traditional search engine relies heavily on advertising for revenue, the same advertising opportunities may not be as readily available for the generative AI-driven experiences it offers. Snapshot answers or dialogue threads don’t seem to lend themselves well to ad placement or sponsored links, at least not currently.

This has sparked controversy, particularly with news publishers who see Google’s use of their content as potentially damaging to their business. Several large news organizations have initiated negotiations with Google over compensation for access to their content. OpenAI, in contrast, has opted for a subscription model for its ChatGPT Plus service.

Alphabet’s Vice President of Search, Elizabeth Reid, has acknowledged that the company is still experimenting with ads in generative AI experiences. Google may explore different ad placements or incorporate ads directly into its answers. However, transparency will be crucial to ensure users understand which portions of a response are paid for.

Ultimately, Alphabet needs to determine how to make clear to advertisers the value they can expect from their investments in generative AI experiences. While Alphabet does have other subscription-based businesses, such as YouTube Premium, none generate the same level of revenue as its advertising model. Monetizing generative AI remains a significant challenge for Google and Alphabet going forward.