Google's Liz Reid on Who Will Own Search in a World of AI

SPEAKER_2 (0:02)

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Joe Weisenthal (0:18)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:23)

And I'm Tracy Alloway.

Joe Weisenthal (0:24)

Tracy, when we talk about AI, we talk a lot about the big labs, the big independent labs, particularly OpenAI and Anthropic. But of course, we know that the legacy tech companies, the so-called hyperscalers, et cetera, they're not just going to give up this groundbreaking technology without a fight.

Tracy Alloway (0:41)

No, and we've certainly seen various efforts to, I don't want to say catch up, but like to keep pace, I guess. Yeah.

Joe Weisenthal (0:48)

So of the major legacy companies, which I would say are like Microsoft, Amazon, Meta and Google, or sorry, Alphabet, I would say clearly like Alphabet is the one that has the model that people are, you don't talk about, Gemini, right? And in a way, that's kind of surprising because one common intuition that people have is that companies aren't very good at developing the thing that disrupts their own legacy business, right? This is just a famous sort of B-school thing that people talk about all the time.

Tracy Alloway (1:20)

Yes. So the issue one would think with AI and Google in particular is that Google, you know, famous for its search. No one believes me, by the way, the first time I ever used Google in like, I guess it was the either late 1990s or early 2000s, I told my parents to invest in the company and they didn't listen to me.

Joe Weisenthal (1:37)

Oh, really?

Tracy Alloway (1:37)

Yeah. They don't believe me either, but I swear I did. The first time I used it, I was like, oh my God, this is so much better.

Joe Weisenthal (1:44)

So I feel so dumb because I remember the Google IPO very well, and I thought I was very smart because it was like I was 20, I think it was 2004

I thought I was very smart back in those days. I don't think it, now that I'm older, I realize I don't know anything, but I thought I was very smart. I was like, oh, these sheep, they're just buying, it's overvalued. Should I short this IPO? It's like a bubble, etc. Thank God I didn't put on some short trade and go bankrupt. But it never occurred to me to go long because I don't, and I think it's the journalist temperament, we're all very cynical.

Tracy Alloway (2:14)

That's right. You have to be an optimist to be an investor.

Joe Weisenthal (2:16)

Yeah, you have to be an optimist. You have to be willing to be part of the crowd. You have to ride the wave. We don't really like riding waves, etc. And so I was like, oh, should I short this? Anyway, I should have bought it.

Tracy Alloway (2:26)

Okay.

Joe Weisenthal (2:27)

I should have held it. You know what? I should have bought it. Even though we don't trade, should have bought it in 2023, when everyone was saying that ChatGPT was going to eat its lunch. Should have bought it a year later when people were saying, well, Gemini is too woke, etc.

All these terms, there are opportunities. But anyway, I'm happy to just talk about it. All right.

Tracy Alloway (2:47)

Now that we've gone on a very long segue, what we're getting at, it's an important segue. What we're getting at is that in theory, AI would seem to pose a threat to Google's core business, which is search. So if you type in a query in Google now, I think I have one open from the last time we recorded a podcast. I don't know why I was looking this up. It says, can you see tankers physically from the Strait of Malacca?

Joe Weisenthal (3:08)

Oh yeah.

Tracy Alloway (3:09)

In the Strait of Malacca from Singapore. So if you type that into Google, it used to be you would just get a bunch of search results.

Joe Weisenthal (3:15)

That's right.

Tracy Alloway (3:16)

Now, you get an AI overview, which basically pulls in a bunch of results from other pages and gives you a summary. So the question is, if people are just going to be looking at these summaries instead of actually going to the pages that Google search used to turn out as links at the top of the page, what does that mean for traffic via Google search?

Joe Weisenthal (3:37)

Well, and then the other big element here, which is that people stop clicking as much on links or even seeing links. What does that mean for the advertising business? If the expectation is that you see the answer right there, et cetera, and one of the questions we have about OpenAI in particular is, are they ever going to be able to launch an advertising business? Can these two things combine, et cetera? We know that to this day that Google search ads are the greatest money printer that's ever been implemented basically in the history of the world. So how this is going to interact and how Google is thinking about these questions, as you say, it's a little unclear to me because yeah, it's nice. I could just put on the same question. Can you see tankers in the Strait of Malacca? I don't know if these are right.