After years of Google’s dominance in the IT avant-garde, rival Microsoft, already ahead of it in the cloud, has overshadowed it by establishing itself as a leader in generative artificial intelligence.
After years of Google’s dominance in the IT avant-garde, rival Microsoft, already ahead of it in the cloud, has overshadowed it by establishing itself as a leader in generative artificial intelligence.
And the two giant American technology groups announced, on Tuesday, their revenue and profits, which exceeded expectations in light of the current economic crisis. The sales volume of Alphabet Group, which owns Google, in the first quarter of this year amounted to about $70 billion, including $15 billion in net profit.
However, the analyst at “Insider Intelligence” Max Willens noted that “there are not enough reasons for investors to be optimistic” despite these two results exceeding market expectations, recalling that the company’s advertising activity is “at risk”, and explained that “revenue + YouTube + decreased again, and no growth Search engine and other segment revenues of only 2 percent shows that the core business of Google + is facing difficulties that it has not seen for a long time.
The company that draws the most power from digital advertising globally is facing the reality of inflation and rising interest rates, which is driving advertisers out of pocket. In addition, Google’s YouTube platform is witnessing fierce competition from the widely popular TikTok.
Like Instagram (owned by Meta) and Snapchat, YouTube sought to replicate the short video service that made TikTok popular, launching Shorts. “The initial data regarding the financial allowances (…) for the creators of the ‘shorts’ videos is disappointing,” said Evelyn Mitchell of Insider Intelligence.
“artificial general intelligence”
Google, which laid off about 12,000 employees in January (6 percent of its workforce) and scaled back its real estate projects, must at the same time seek to defend its position in the field of artificial intelligence.
Microsoft has achieved a clear advantage in the field of generative artificial intelligence (capable of creating on-demand content in the language of everyday life) since the launch of the “Chat GPT” program by the American startup OpenAI in November, as the group invested heavily in this field.
And “Microsoft” integrated the “GBT” program in its search engine, “Bing”, which revived it and allowed it to attract an increasing number of users thanks to artificial intelligence, after it was unable to compete with “Google”.
And the two companies are now competing to announce the addition of generative artificial intelligence functions to their programs, from the “Word” word processor to the “G-Mail” mailbox.
“Most organizations are thinking about how they can use AI in their transformation process,” Sundar Pichai said in a telephone interview with analysts on Tuesday. Last week, Alphabet brought together the Brain and DeepMind teams to accelerate research in the field of artificial intelligence.
And the head of the new Google DeepMind unit, Demis Hassabis, tweeted: “We therefore have the opportunity to build artificial intelligence, and in the long run, artificial general intelligence in the service of humanity.” He was referring to an idea popularized by OpenAI, which is to create Artificial intelligence systems outperform humans in many cognitive tasks.
Cloud Computing
In this competition for the most advanced technology, Microsoft also enjoys superiority in the field of cloud computing, a sector in which it ranks second in the world after Amazon.
And “Google Cloud”, which specializes in this field, announced operating profits of $ 191 million in the first quarter, which is the first time that the company has achieved a profit.
These numbers, Max Wellens noted, “show that management is really working to boost the profitability of this business. But in practice Google Cloud is still far behind its main competitors, and its growth is slowing.”
As for Microsoft’s revenue from cloud computing, which relies on external servers but also largely on artificial intelligence, it rose by 22 percent year-on-year, reaching $28.5 billion. These revenues now represent more than half of the company’s sales volume.
In total, the company’s sales from January to March amounted to $52.8 billion (an increase of 7 percent over one year), and net profit reached $18.3 billion (an increase of 9.4 percent).
Its share value rose by about 9 percent in electronic trading after closing trading. As for the value of “Alphabet” shares, it rose by 1 percent, after it increased slightly following the announcement of a plan to buy back shares worth $ 70 billion. And it seems that the current quarter will not be any better for the giant company.
The US central bank intends to continue raising interest rates to fight inflation, despite the risks of recession that this measure may cause. US and European authorities are increasingly regulating major Internet platforms through several steps, from competition law to social networking abuses.
