Google’s search revenue rose in the first quarter of 2023 after years of rapid growth, suggesting the tech giant may be having some trouble with its golden goose. In today’s earnings release, Google reported that “search and other” revenue rose 1.87 percent year-over-year (jumping from about $39.6 billion to $40.4 billion), growth significantly less than the 24.28 percent jump the company saw in the first quarter. from 2022 and an increase of 30.11 percent in the first quarter of 2021.
At the moment, search is experiencing great competition from all sides. Microsoft is trying to steal users away from Google with its AI-powered Bing chatbot, which became widely available last month. Many people turn to other tools like OpenAI’s ChatGPT to search and learn about different topics. ChatGPT reportedly raised major alarm bells within Google, and in March the company opened access to its Bard chatbot. But more than a month later, Google is still calling Bard an “experiment,” and company employees are said to have called it “worse than useless” before it launched. (In our own tests, Bard generally didn’t perform as well as the Bing and ChatGPT chat bots.)
As a result, Google appears to be very focused on building its AI capabilities. He plans to add creative AI features to Workspace products like Gmail and Docs. Just last week, the Brain and DeepMind groups came together into one Google DeepMind Foundation, a move Pichai says aims to “significantly accelerate our progress in AI.” It also seems like a sure bet that Google will get a lot of AI news at Google I/O on May 10th.
Despite the slow growth — which is also occurring at a difficult time for advertising in general — Google executives seemed pleased with search’s performance last quarter. Chief Executive Officer Sundar Pichai said the research is “performing well,” while Chief Financial Officer Ruth Porat praised the “resilience” of the business.
Google’s future isn’t entirely focused on AI. As part of Tuesday’s earnings report, Google revealed for the first time that its cloud business is profitable. The company also continues to build out its device lineup, and rumor has it that we could see news about the Pixel 7A, Pixel Tablet, and Pixel Fold at I/O as well. It reported “significant momentum” for its Pixel devices during its recent earnings report, and it looks like Google wants to keep that progress going with this rumored list of new products.
The company has also been affected by the broader economic downturn, announcing in January that it would lay off 12,000 employees.