What Did Google Do This Week? - 28/04/24 [+40 LINKS]

Google just had its best quarter since 2015 and is now worth over two trillion dollars, but all is far from well at the Googleplex…

This issue of WDGDTW is free thanks to…

eight&four is delivering GenAI consultancy to marketers at Hyundai, Kingfisher and British Heart Foundation. Contact us to talk about integrating GenAI into your marketing workflows – from social media asset generation to AI personas.

Find out more here.

GOOGLE TOPS TWO TRILLION ON WALL STREET

Alphabet (Google’s parent company) saw a significant boost in its stock value following its announcement of both its inaugural dividend and a notable surge in profits during the first quarter of 2024, taking Wall Street’s estimated value of the company to a record $2 trillion. Alphabet CEO Sundar Pichai emphasised the company’s pivotal shift towards artificial intelligence, framing the era as a unique opportunity that could redefine the company's trajectory.

Google's revenue for the first quarter of 2024 hit $80.5 billion, marking a 15% increase compared to the same period last year. Put another way, Google made in one quarter what the entire country of Estonia makes in a year. Cloud and YouTube have been big earners so far this year, with the Cloud generating $9.57 billion (a 28% increase) and YouTube making $8.1 billion in ad sales alone. Put another way, while being third behind Amazon and Microsoft for Cloud revenue, Google outpaced both for growth this quarter - no mean feat.

Changing search engine habits remain a sticky issue though, as Google Search boss Prabhakar Raghavan used a staff-wide meeting to warn his employees of a ‘new operating reality’ in the age of AI. The market responded positively in the after-hours trading, with Alphabet's shares rising approximately 15%. Additionally, the company's announcement of its inaugural dividend, set at $0.20 per share and slated to become quarterly, further bolstered investor confidence.

Watch the full earnings here and see below to see where is all comes from.

The news broke amidst continued controversial firings at Google offices due to ‘disruptive’ protests against Google Cloud’s deal with the Israeli government. The firings came in two waves, with around 30 people fired last week and another 20 this week. Employees were voicing their objection to Project Nimbus, the cloud computing and artificial intelligence contract (worth a reported $1.2 billion) between Google and Israel, the exact purpose of which remains unclear. The contract also involves Amazon and details remain highly secretive.

Considering this week’s eye-watering stock market valuation, Alphabet seems to be weathering the storm. The company managed to rebound from setbacks like the poorly executed launch of its Gemini AI tools in February, which initially caused a significant drop in stock value. However, it’s increasingly becoming clear, that Google’s patience has worn thin and is longing for the days of employees rowing together while the company fights the AI war ahead.

Thanks to continued investment in AI and both Cloud and YouTube outperforming Wall Street’s predictions, Google had its best quarter since 2015. Pichai and co intend to continue investing big on AI, even if their own Gemini rollout is still not the roaring success the company had hoped for.

Time will tell if Gemini delivers on promises to generate substantial revenue, but AI is also changing the way people search for stuff online, which in turn is creating challenges for Google Search’s ability to generate cash. Stern words from the Search boss contrast with those of the AI-enthused CEO, which is probably a decent indication of where the company’s focus is right now (answer: their focus is AI).

Amid all this, the thinkpiece community has voiced its customary horror at Google’s decision to fire all those anti-Israel protestors, while Pichai demanded that everything go back to normal in the Google offices. While the dissent of ±50 employees almost pales into insignificance in the face of the company’s trillion-dollar valuation, it’s important to note this is not a company first for Google. The company has fired employees for protests, sit-ins and other behaviours for years.

Google is accelerating its AI ambitions amidst stellar financial growth. The company needs to reconcile these advancements with its internal cultural issues, particularly around employee activism or it could be firing the people who stop them making mistakes before they make profits. The days of ‘do no evil’ have been gone for some time, but it seems not all Googlers are buying the ‘new operating reality’ memo quite yet.

50% OF BOSSES WORRY YOU DON’T KNOW ENOUGH ABOUT AIYou need ‘What Did OpenAI Do This Week?’, the weekly deep dive on the future of AI and what actually matters. We’re not for suckers, we don’t teach you how to prompt; we teach you how to stay ahead and on top. 

Pay monthly ($15) or annual ($99). Cancel anytime. Trusted by senior execs at Apple, Google, Bloomberg, Pepsi, Samsung and +40% of the F500.

Someone sent this to you and you want your own copy? We thought you looked smart. Come on in, the water’s usually choppy(!).