Google: The AI Company. Google is amazingly well-positioned... will they win in AI? (audio)

I went and looked at a studio, well, a little office that I was gonna turn into a studio nearby, but it was not good at all. It had drop ceilings, so I could hear the guy in the office next to me. You would be able to hear him talking on episodes. [laughing]

Third co-host!

Third co-host.

Is it Howard?

No, it was, like, a lawyer. He seemed to be, like, talking through some horrible problem that I didn't want to listen to-

[laughing]

- but I could hear every word.

Does he want millions of people listening to his conversations? [laughing]

[laughing] You're right. Right.

All right.

All right. Let's do a podcast.

Let's do a podcast.

[laughing]

Who got the truth? Is it you? Is it you? Is it you? Who got the truth now? Hmm. Is it you? Is it you? Is it you? Sit me down. Say it straight. Another story on the way. Who got the truth?

Welcome to the Fall 2025 season of Acquired, the podcast about great companies and the stories and playbooks behind them. I'm Ben Gilbert.

I'm David Rosenthal.

And we are your hosts. Here is a dilemma: imagine you have a profitable business. You make giant margins on every single unit you sell, and the market you compete in is also giant, one of the largest in the world, you might say. But then on top of that, lucky for you, you also are a monopoly in that giant market, with ninety percent share and a lot of lock-in.

And when you say monopoly, monopoly as defined by the US government.

That is correct. But then imagine this: in your research lab, your brilliant scientists come up with an invention. This particular invention, when combined with a whole bunch of your old inventions by all your other brilliant scientists, turns out to create the product that is much better for most purposes than your current product. So you launch the new product based on this new invention, right?

Right.

I mean, especially because out of pure benevolence, your scientists had published research papers about how awesome the new invention is, and lots of the inventions before also, so now there's new startup competitors quickly commercializing that invention. So of course, David, you change your whole product to be based on the new thing, right?

Uh, this sounds like a movie.

Yes, but here is the problem: You haven't figured out how to make this new, incredible product anywhere near as profitable as your old giant cash-printing business, so maybe you shouldn't launch that new product. David, this sounds like quite the, uh, dilemma to me. [laughing]

[laughing]

Of course, listeners, this is Google today, and in perhaps the most classic textbook case of the innovator's dilemma ever. The entire AI revolution that we are in right now is predicated by the invention of the Transformer out of the Google Brain team in 2017. So think OpenAI and ChatGPT, Anthropic, NVIDIA hitting all-time highs. All the craziness right now depends on that one research paper published by Google in 2017. And consider this: Not only did Google have the densest concentration of AI talent in the world ten years ago that led to this breakthrough, but today, they have just about the best collection of assets that you could possibly ask for. They've got a top-tier AI model with Gemini. They don't rely on some public cloud to host their model. They have their own in Google Cloud that now does fifty billion dollars in revenue. That is real scale. They're a chip company with their Tensor Processing Units, or TPUs, which is the only real scale deployment of AI chips in the world besides NVIDIA GPUs. Maybe AMD, maybe, but these are definitely the top two.