Big Tech's woes signal wider US decline as China strikes

Google and its Big Tech buddies are seeing growth slow while costs soar, making the future look bleak - and Sundar's running out of options...

A year ago, I predicted Google CEO Sundar Pichai was about to unleash a Hail Mary. He would use AI as a cover story to flood search and YouTube with ads.

My thesis was that it had saturated its market and was showing its age. Finding new customers was getting harder, so mining ads was the logical Plan B for growth.

Armed with Google’s latest financials this week, I decided to run a retrospective to see if I was right - and found a much bigger story of US decline.

Late-stage Google has indeed used three methods to maintain its revenue growth.

Strategy #1: It’s using AI to grow traffic.

Problem: It’s been so successful over 20 years that it has a 91 per cent share and has run out of customers in core markets. And it’s blocked from new ones, like China.

Solution: It’s using AI Overviews to create unlimited search results and new traffic that doesn’t rely on humans. (Meta’s doing the same with synthetic social.)

Strategy #2: It’s flooding pages with more ads.

Problem: More ads mean more interruptions, which leads to more complaints from consumers, and advertisers.

Solution: Ignore the consumers and keep AI search results on Google.com to generate more ad inventory to sell.

Strategy #3: It’s raising ad prices.

Problem: Click through rates and advertiser satisfaction is in decline. It’s even losing share in search. It’s running out of blood to drain from the stone.

Solution: Build the dominant ad solution and make it proprietary and deliberately opaque, so you can twiddle the dials to hike prices out of sight and censure.

You don’t need a $450,000-a-year analyst to figure this out, you need a $9.99 calculator.

And my analysis shows Google’s doing all three and assiduously keeping it a trillion light years from its earnings announcements this week.

So, today, let me share a series of charts that show why its willing to risk its reputation, upset consumers, piss-off advertisers, and tweak regulators.

Because under all the shiny marketing lurks a crisis…