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Showing posts with label Competition. Show all posts
Showing posts with label Competition. Show all posts

Thursday, July 31, 2025

Google is reaping rewards of its unfair AI advantage

 

Sundar Pichai, Alphabet’s CEO. — Bloomberg

WITH two billion monthly users in 200 countries, Google’s AI Overviews can claim to be the most popular generative artificial-intelligence (AI) product yet released to the public.

The short summaries generated by the company’s Gemini AI model have turned Google from search engine to answer engine, settling the nerves of investors who were worried that ChatGPT was going to smash Google’s business model to pieces.

Then again, to describe those billions as “users,” as parent company Alphabet Inc did when announcing its quarterly earnings last week, is perhaps disingenuous.

No one consciously uses AI Overviews – it’s just there when users perform a regular search on Google, something billions of them have done several times a day for two decades.

That’s one key advantage Google has over its competitors: People already associate the service with finding things out.

The company has every right to capitalise on that reputation, one it built off the back of genuine innovation and quality (though, admittedly, it was later solidified with illegal multibillion-dollar deals to prevent competition).

Google’s second advantage with AI Overviews, however, warrants further scrutiny.

Like other generative AI tools, the feature draws heavily from content that Google does not own but is available on the open web.

Summarised answers are synthesised from one or more sources into a rewritten piece of information.

That’s useful for users; it saves them a click.

But it’s devastating for content creators, who lose a would-be visitor and the revenues that follow.

Startling Pew Research data released last week suggested users were considerably less likely to click through to websites if presented with an AI Overview, as is increasingly the case.

One in five searches in a March 2025 sampling contained an AI Overview, a frequency that rises to as high as 60% if the queries are longer or contain the bread-and-butter words of journalism: who, what, where, when or why.

Google has pushed back against the methodology of the Pew study, saying its dataset – 68,879 searches by 900 US adults – was too small to be representative. Other AI chatbots offer the same kind of functionality, of course.

But in those cases, content publishers can block these companies’ “crawlers” if they wish to do so by adding a line of code that acts as a digital bouncer at the door.

That approach doesn’t work with Google, however, because blocking its AI crawler means also blocking a site from Google’s search results as well – a death sentence for any website.

Dominant position

Google is leveraging its dominant position in one industry to force success in another.

It’s monopolistic behaviour and something that should be addressed immediately as part of the remedies being devised as part of the antitrust trial it lost last year.

This is about taking away Google’s cheat code.

“Google still thinks they’re special and that they don’t have to play by the same rules that the rest of the industry does,” Matthew Prince, chief executive officer of Cloudflare, told Bloomberg News in an interview last week.

New tool

His company recently launched a tool that would allow publishers to set up a “pay-per-crawl” model for AI use.

It works on crawlers from OpenAI, Anthropic, Perplexity and most others – but blocking Google AI would, again, mean blocking a site from Google’s search engine.

In Google’s defence, the launch of AI Overviews was a move spurred not by a desire to crush the economics of web – which has driven its entire business –but to stop its users from deserting the company in favor of AI chatbots.

“The consumer is forcing them,” Wells Fargo analyst Ken Gawrelski said.

Google was more than satisfied with the status quo, Gawrelski told me, which is partly why the company was beaten to market by smaller AI firms that didn’t need to worry about protecting an existing revenue stream.

Now the fight is on, Google is playing catch-up and doing rather well at it.

It has protected its advertising revenue, which in the last quarter was up 12% to a record-high US$54.2bil compared with the period a year earlier.

Supply constraints

Its AI and cloud business faces supply constraints, warranting an additional US$10bil in capital expenditure, bringing it to US$85bil for the year.

It recently added “AI Mode” to its search engine, which is like AI Overviews on steroids.

The company has barely started to integrate AI across its varied products like Gmail and Maps – the Financial Times noted that 15 distinct Google products have more than 500 million users.

Executives said they will be able to monetise all of these innovations quickly.

The company has less to say about what happens to the businesses that rely on Google traffic to stay alive, in turn providing the content that makes smart AI possible.

The shift is profound: Google’s creation democratised the web, making it possible for an ecosystem of new sites and services to be found and supported.

Now, the company’s strategy is to make it so users need to visit only Google.

“We have to solve the business models for the varying players involved,” Sundar Pichai, Alphabet’s CEO, said in a call with analysts without elaborating.

AI wreckage

Salvaging content creators from the coming AI wreckage begins by forcing Google to relinquish its unfair advantage.

Only then will the company be compelled to enter into reasonable arrangements with content creators to utilise their content, as it has already done with the likes of Reddit.

We can be mildly encouraged by the fact that Google is reportedly seeking out content deals for use within its other AI products. Perhaps this is in anticipation that the unfair advantage won’t last. — Bloomberg

Dave Lee is Bloomberg Opinion’s US technology columnist. The views expressed here are the writer’s own.

Sunday, March 23, 2025

Getting it right

 

US-china trade needs to improve as much as their bilateral relationship deserves much better, but not at the present rate.

Auto ambition: With limited competition abroad but hypercompetition at home, China’s EV industry has powered ahead. — AFP

T

HE constant stream of major global events can be disorienting, particularly when their consequences spin off to produce secondary effects.

Worse, self-interested politics enters as a disabling narrative to make factual understanding more difficult. How to make sense of all this?

One way is to identify the root causes and critically analyse how they develop and proceed. Factual accuracy in descriptions and definitions always helps, while imprecision makes everything more difficult.

Much relates to a rising China and the state of US-China relations. With the world’s biggest economies, theirs is the most critical bilateral relationship for the world and also the most politically fraught. 

In 2004 China displaced the US as Japan’s main trade partner. The following year it displaced the US as the world’s biggest consumer market.

In 2006 the EU became China’s biggest trade partner while China became the EU’s second-biggest. In 2009 China displaced the US as Africa’s main trade partner, and in 2010 it beat Japan as the world’s second-largest economy.

China’s external trade covered a wide range of goods and services as its productive forces gained critical mass. In the process, industrial clout came not simply from resources and scale but also strong production ecosystems and supply chains, including a skilled workforce.

China quickly developed as the “world’s factory” with the Global North’s industries choosing to relocate production there. They flocked to establish factories in China offering the best returns on investment.

But while foreign companies retained older technology like internal combustion engines (ICE), China prioritised electric vehicles (EVs) to cut air pollution and dependence on imported oil. There was no domestic oil lobby to derail EV development, only government encouragement instead.

With limited competition abroad but hypercompetition at home, China’s EV industry powered ahead. That meant a quick and considerable lead in technology and marketing overseas.

In 2009 China surpassed the US as the world’s largest automobile market. This spanned both ICE vehicles and EVs, with a muted but growing market for the latter.

In 2020 China displaced the US as the EU’s top trading partner. That same year it acquired the world’s largest foreign exchange reserves, developed the finest fintech, and had the most companies listed in the Fortune Global 500.

China’s auto production was booming, exploding into a global market hungry for sophisticated yet affordable vehicles. China fulfilled that need better than any other country.

In 2021 Chinese auto exports surpassed South Korea’s, and the following year it displaced Germany as the world’s second-biggest exporter. Within months China beat Japan as the world’s top auto exporter.

Much the same is happening with other sectors, if at different growth rates. China continues rising through the rapid development of multiple industries, particularly when several foreign markets remain unexplored or under-served.

Western automobile manufacturers in China felt a need to work more with Chinese companies, particularly on EVs and hybrids. They prefer joint ventures to discriminatory tariffs or sanctions on Chinese vehicles from their governments.

Yet last April US Treasury Secretary Janet Yellen visited China to complain about “excess capacity” and “overproduction”. It was more a political point than an economic argument.

Excess capacity is surplus productive capability over and above what is needed or appropriate. Overproduction is the additional goods produced and left idle because of insufficient demand.

As the world’s factory with regional markets still untapped, China has no excess capacity or overproduction. High Western tariffs to stifle demand may create a semblance of either, but artificially inducing a situation to accuse Chinese industry of it is dishonest.

Sometimes dumping happens with a specific commodity temporarily, typically for an intermediate or upstream item. But that is different.

After Joe Biden’s administration acted against Chinese EVs, batteries and solar panels, they shifted to markets in Russia, Latin America, Central Asia, Africa and South-East Asia. China is a global producer, and since there is no global overcapacity or overproduction, it is not engaging in either.

Chinese industry’s ultra-competitiveness seriously challenges US industry, notably in the latter’s obsolete business models. Regaining US global competitiveness requires extensive retooling, not distorted narratives.

From 2011, China has consistently been the world’s top patent applicant country. Each year it graduates more STEM students than the US population has in total, having produced the most STEM PhDs every year since 2007.

In 2021 China beat the US in its national share of published high-impact AI papers. In the same year it also displaced the US with the highest national net worth.

Such data from established Western sources also noted in 2023 that China had seven of the world’s top 10 universities conducting leading scientific research. Last year China had six of the world’s top 10 STEM institutions.

The US is now denying students from China study visas. America would be greater in training more American students without restraining others who pay to be there.

By Bunn Nagar,  Director and Senior Fellow of the BRI Caucus (Asia-Pacific), and Honorary Fellow at the Perak Academy. The views expressed here are solely the writer’s own.

Saturday, June 15, 2024

The classic course on Generative AI by Martin Musiol; Can Generative AI unlock productivity and growth?

     

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If you want the economy to change, appoint business leaders who understand how to manage institutional change that remains business-friendly. — Reuters

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Users will have control over generative AI in Windows



Copilot should be central to Windows 11 24H2. — AFP Relaxnews

Central to the next major Windows update, generative artificial intelligence promises to make its way into most Microsoft programs, in the aim of boosting user productivity. Users should, however, be able to decide which applications can and can't make use of the technology.

Faced with concerns that generative AI could be too invasive, Microsoft is reportedly set to give users a say in how applications access these artificial intelligent tools. According to the XDA Developers website, the incoming major update to Windows 11 (24H2), expected by the end of the year, will offer the possibility of defining individual permissions for each application.

This will enable users to disable the use of generative AI for some or all applications. On a larger scale, companies will be able to disable access to this AI for all their employees if they deem it inappropriate or unnecessary.

The integration of generative artificial intelligence into Windows should simplify system management, as well as the day-to-day use of most of its accompanying programs. At the core of this update are the latest developments for Microsoft's Copilot, provided it finally complies with European legislation on digital markets (DMA). 

Indeed, until further notice, Europeans will be left without Copilot, the AI-powered intelligent assistant with which it is possible to interact or customize a computer's operating system. The assistant can be useful for working on various documents (rewriting, summarising or simply explaining them) and can answer practical questions. It can be accessed directly from the taskbar, and soon via a dedicated button on future PCs.

Meanwhile, Microsoft has sought to reassure users after its new Recall feature sparked controversy. In fact, the firm has said that Recall will now be an opt-in feature rather than activated by default. Considered to be particularly intrusive, but promising to facilitate PC searches, Recall is designed to take a series of screenshots of the computer at regular intervals and then save them locally, raising questions about privacy. Initially, however, this feature will only be available on the new Copilot+ PCs, which are due to go on sale this summer. – AFP Relaxnews

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