Google’s “search & other” revenues increased by only 1.87% YoY in Q1 2023, reaching $40.4 billion. This indicates a significant drop in growth compared to the 24.28% and 30.11% jumps witnessed in Q1 2022 and Q1 2021, respectively. This sluggish growth comes after years of rapid growth, and it suggests that the tech giant might be facing some difficulties with its golden goose.
Competition from All Sides
Google’s search engine is currently facing significant competition from all sides. Microsoft’s AI-powered Bing chatbot is trying to steal users away from Google, and OpenAI’s ChatGPT is becoming increasingly popular among people looking to search for and learn about various topics. Google employees reportedly labeled their own chatbot, Bard, “worse than useless” ahead of launch.
As a result, Google is focusing on building out its AI capabilities. The tech giant is planning to introduce generative AI features to Workspace products like Gmail and Docs. Recently, it combined its Brain and DeepMind groups into one Google DeepMind organization, which CEO Sundar Pichai says is intended to “significantly accelerate our progress in AI.” It is also expected that Google will have a lot of AI news at the Google I/O conference on May 10th.
Despite the slower growth, Google executives seem pleased with search’s performance last quarter. Ruth Porat, the CFO, praised the business’ “resilience,” while Sundar Pichai commented that search is “performing well.”
Apart from AI, Google’s future is not entirely focused on it. As part of its earnings report, the tech giant revealed for the first time that its cloud business is profitable. Additionally, Google is continuing to expand its devices portfolio, and rumors indicate that news about the Pixel 7A, Pixel Tablet, and Pixel Fold could be released at I/O. The company reported “great momentum” for its Pixel devices during its last earnings report, and it seems Google wants to keep that progress going with the rumored slate of new products.
Google has also been affected by the broader economic downturn, and it announced in January that it would be laying off 12,000 employees.