In Homer's epic, Achilles is an invincible hero, with most of his body impenetrable, but his heel is the most vulnerable part. Once caught, his other advantages disappear.
Google is like a hero in the field of technological innovation, and now it has grown into a technology giant. However, with the technological changes brought about by AI, its "Achilles' heel" has gradually emerged.
On October 25th, the stock price of Google's parent company Alphabet plummeted, with a 9% drop at the end of the day. Its market value evaporated by $166.6 billion, equivalent to approximately 1.2 trillion yuan, making it the fifth largest decline in US stock market history.
Some people may be surprised, how could a technology giant like Google experience such a significant decline overnight, as if a stable star suddenly collapsed rapidly?
Although short-term fluctuations in stock prices may have some randomness, if long-term tracking analysis is conducted from an industry perspective, some clues can still be seen.
On the surface, the trigger for this decline is the third quarter financial report released by Alphabet.
In fact, their overall financial performance was good, with revenue exceeding market expectations, increasing by 11% year-on-year, and their core advertising business also growing by 9%.
However, the cloud business that analysts and investors are most concerned about is less than expected, with a year-on-year growth of only 22%, and a year-on-year growth of 37%, indicating a trend of slowing down growth.
The bigger problem is that Microsoft released its financial report on the same day, but performed even better. Microsoft's intelligent cloud department has become their largest source of revenue, generating $24.3 billion in revenue, an increase of 19%, and revenue from Azure increased by 29% in this quarter.
The key is that Microsoft originally had a 23% share in the cloud services field, ranking second in the world, while Google had a 10% share, ranking third in the world. In this situation, Microsoft's performance is better than Google, which means the gap between the two sides may widen, resulting in a 9% drop in Google's parent company.
However, both revenue data and stock prices are superficial, and the real hidden danger behind them is that people may gradually realize that Google is not only lagging behind in the era of artificial intelligence, but may also find it difficult to catch up. Why do you say that?
In fact, Google's characteristic is its strong foresight in many fields, but the problem is its weak commercialization ability.
In the past, Google has made leading innovations in both the internet and mobile internet era, relying on search engines and Android systems to occupy a huge market share, and the market foundation seems very solid.
However, when they become followers in the new round of AI technology revolution, their commercialization ability will become a huge constraint, and even become the "Achilles' heel" of giants.
Although Google has had a rapid growth momentum in the cloud services field in the past, the future cloud services field will transform into AI competition based on cloud services, and artificial intelligence service capabilities will become the core competitiveness of cloud platforms.
Looking back at the statement released by Microsoft, it can be seen that they attach great importance to AI in terms of cloud platforms.
Microsoft CEO Satya Nadella claims that their Azure cloud service has the best AI training and inference infrastructure. At the end of July, there were 11000 customers using OpenAI's model services on Azure, and currently there are over 18000. Moreover, their CFO Amy Hood also stated that AI services contributed 3 percentage points of growth to Azure Cloud, which also exceeded expectations.
The implication is that GPT's service capabilities have attracted many customers to their cloud platform.
In contrast, Google has also put a lot of effort into the cloud platform, not only creating a specialized AI chip Cloud TPUv5e, improving AI infrastructure, but also integrating models from companies such as Meta and Anthropic using the Vertex AI platform, giving developers more choices. But the ultimate result is weak growth in cloud platforms.
One of the factors is the performance gap of AI models on cloud platforms. Google also has its own developed model, PaLM2, but its performance has never surpassed that of GPT4. Although Google claims to launch a more powerful Gemini model, Bard's repeated failures have long lost people's confidence in Google's self-developed model.
Some people may say that Google has been deeply involved in the AI field for many years, and even the core Transformer of GPT came from them. Is it possible for Google to further narrow the gap between models?
Although this possibility cannot be ruled out, Google faces a greater problem, which is that on the one hand, its tactical ability is weak, and its ability to capture customers is insufficient. On the other hand, it has not created new commercial models based on AI, and there is no strategic innovation. All of these are tactical level follow-up after Microsoft and OpenAI make new actions, and the results will naturally fall behind.
For example, in the field of cloud platforms, Google's Vertex AI platform can choose a model, and Microsoft's Azure can also choose a stronger model; Google has Duet AI collaboration tools, and Microsoft's Azure AI Studio allows developers to build or fine-tune their own models.
The same is true in other application fields. In May of this year, when Google launched its big model PaLM 2, it also released the search generation experience SGE and AI assistant Duet AI. At that time, the stock price surged by 4%, and some media even suggested that the return of Google King was a shame to the past.
But at that time, I suggested that it was just a fake. Because PaLM2 is following GPT, SGE is following New Bing, and Duet AI is following Microsoft's Copilot, most of the new features are enhancements in detail, which means that Google is no longer an innovation pioneer in the AI era.
Currently, Google's AI related products are still following suit or using AI for feature tuning on its own Android system, but there have been no revolutionary innovations.
The key is that the first-mover advantage of AI large models is very significant, and the more leaders, the easier it is to form faster model iteration cycles. This means that without significant strategic level model innovation, it will be difficult to achieve catch-up by only following tactical tactics.
Until the financial reports showed a more intuitive impact, more and more people's expectations for Google plummeted significantly, and the weakness of commercialization became evident, leading to a slightly sudden decline.
Of course, this does not mean that they have no possibility of 'the king returning'. However, if you want to transition from a follower to a leader, you need to sink your heart to find the basic laws behind industrial development, analyze and anticipate future trends rationally, and make strategic adjustments decisively. This is the foundation of catching up quickly.
Microsoft is not like this. After seeing the future prospects of AI, although the self-developed large model lacks strength, even using strategic cooperation methods, it must adhere to strategic upgrades and fully introduce AI into its products.
There are historical reasons for Google's poor product capabilities. Strictly speaking, search is just a technology, not a complete product, resulting in Google's strong technology and weak products. But search stickiness is very strong. If Google can resolutely upgrade its search product with AI, rather than just developing an AI search function outside of its existing product, I believe there is a chance to counter it. The AI competition on mobile devices is about to fully unfold. If Google can comprehensively upgrade its Android system and deeply integrate AI features, it also has the opportunity to take the lead.
To summarize, what Google needs is not to create a "second curve" with AI, but to use AI to revolutionary upgrade existing core products. But historical experience tells us that the core products that contribute to the main revenue of enterprises are often difficult to undergo revolutionary upgrades, which is the so-called "curse of the successful". So Google clearly has a technological advantage, but it is difficult to escape the fate of backwardness.
In this era of technological revolution, opportunities abound. Although successful individuals in the past have mastered the advantages of resources, it is not easy to stay ahead. It is necessary to not forget their original intention and put down their mentality of success. Of course, this also gives new entrepreneurs the opportunity to achieve future success.