Google is Winning the AI Race
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Further to last week’s discussion of Gemini’s rising dominance, we have more charts to demonstrate the real-world impact. Gemini app downloads are catching up to ChatGPT’s, and time spent chatting (per visit) has already surpassed its closest peers:
Given that Gemini has better AI, better distribution (Google can reach billions of users), and is cheaper to use, the only thing ChatGPT has left is a brand and first mover advantage. Investors are starting to question whether that moat is enough to maintain market share.
As an aside: Anthropic (maker of Claude) is preparing for their grand Initial Public Offering (IPO) which means they are doubling efforts to win against ChatGPT. Claude is already a crowd favorite for coding tasks and used extensively in the enterprise world. Said differently, ChatGPT is getting squeezed by multiple strong competitors.
We said last week, the battle of AI models is no longer fought on capability, but rather cost and reach. This is true of most commodities, but especially for consumer-grade AI models, as it is becoming harder to differentiate between them. From personal experience, I often find myself switching between models based on whatever is convenient for the task at hand. This is true of text-to-text generation and will likely be true of text-to-video as well.
It will be interesting to see how Google sets the pace in this race. Their ad-supported business model is hard to beat because it’s free for customers. Recall that in 1999, AltaVista, Lycos, and Yahoo were the dominant search engines before Google came in with a better product. Will it be possible to make a “better” AI model, or will “free” be enough to win? And will this be as profitable as the search engine business? Time will tell.
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