If we learned anything from Big Tech’s earnings this quarter, it’s that Microsoft, Meta, Amazon, and Apple have a clear vision for the future & and that Google doesn’t. Don’t get me wrong. They have a vision. It’s just a bad one. Their vision: Ads, ads, and more ads. The only thing they seem to know how to talk about, the only thing they seem to know how to do, is sell ads. Their grand vision for artificial intelligence is about how to improve the ad experience and use AI to place ads alongside tools like Search Generative Experience.
Where are the other members of Big Tech focusing their vision? Why is Google’s lack of vision a big deal? And what does all of that mean for your business? That’s what this episode of the Thinks Out Loud podcast is all about.
Want to learn more? Here are the show notes for you.
Google Lacks Vision: Big Tech Earnings and the State of Digital Q1 2024 (Thinks Out Loud Episode 412) Headlines and Show Notes
Show Notes and Links
- Desktop operating system market share 2013–2023 | Statista
- Animation: Internet Browser Market Share (1996–2019)
- History of Microsoft – Wikipedia
- Internet Explorer – Wikipedia
- Browser Market Share Worldwide | Statcounter Global Stats
- 2023 Q4 Earnings Call – Alphabet Investor Relations
- Q4 2023 Alphabet earnings release PDF link
- Google 10K 2023 PDF link
- 34 Eye-Opening Google Search Statistics for 2024
- Amazon.com, Inc. – Overview
- Amazon.com, Inc. – Amazon.com Announces Fourth Quarter Results
- Amazon.com, Inc. – Quarterly results
- Amazon.com, Inc. – Amazon.com Announces Fourth Quarter Results
- Amazon 2023 Financial PDF link
- Amazon earnings call transcript PDF link
- Microsoft Investor Relations – Home Page
- FY24 Q2 – Press Releases – Investor Relations – Microsoft
- Microsoft Earnings Call Transcript FY24Q2
- Microsoft Earnings Slides FY24Q2 PPTX
- 2024 Predictions: Putting AI in Marketing to Work (Thinks Out Loud Episode 409)
- Amazon, Google, Facebook, Apple and Microsoft Have a Secret Plan Right Now. Here’s Why You Should Care (Thinks Out Loud Episode 286)
- META Q4 2023 Earnings Call Transcript PDF link
- Meta-12.31.2023 – Exhibit 99.1 PDF link
- Meta Earnings Presentation – Q4 2023 PDF link
- X (Twitter) Statistics: How Many People Use X? (2024)
- Apple Earnings Call – Apple
- Apple Consolidated Financial Statements PDF link
- Apple 10-K 2023 PDF link
- Apple Inc. (NASDAQ:AAPL) Q1 2024 Earnings Call Transcript
- Apple Inc. (NASDAQ:AAPL) Q1 2024 Earnings Call Transcript – Insider Monkey
You might also enjoy this webinar I recently participated in with Miles Partnership that looked at "The Power of Generative AI and ChatGPT: What It Means for Tourism & Hospitality" here:
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- A Brief Introduction to Thinks Out Loud. As a bonus, we’ve also included this PDF document that highlights some of our core episodes to help you dig into what the show is about. We think it will help you capture the show’s essence while you’re working your way through the 300-plus episodes published so far. Download it here.
- Digital & E-commerce Maturity Matrix. As a bonus, here’s a PDF that can help you assess your company’s digital maturity. You can use this to better understand where your company excels and where its opportunities lie. And, of course, we’re here to help if you need it. The Digital & E-commerce Maturity Matrix rates your company’s effectiveness — Ad Hoc, Aware, Striving, Driving — in 6 key areas in digital today, including:
- Customer Focus
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Transcript: Google Lacks Vision: Big Tech Earnings and the State of Digital Q1 2024
Well, hello again, everyone, and welcome back to Thinks Out Loud, your source for all the digital expertise your business needs. My name is Tim Peter. This is episode 412 of The Big Show, and thank you so much for joining us. I think we’ve got a really cool show for you today. So, in the late 1990s, Microsoft Windows ran on more than 90 percent of the world’s personal computers.
That’s according to Wikipedia. And by 2003, Microsoft’s Internet Explorer web browser owned 95 percent of the market for web browsers. To people like me, to people at the time, Microsoft was the Borg, right? Resistance was futile. They were everywhere. And if you look today, despite the fact that Microsoft is doing some amazing things, and frankly, some of the coolest things they’ve ever done, they are nowhere near as dominant as they once were.
Windows is still a major operating system. Edge is still a browser people use. Microsoft is an enormous part of big tech. They’re also not inevitable in the way that they once were. You can live your entire life and never have to deal with Microsoft if you choose not to. A lot of people are choosing to work with Microsoft because they’re doing some really cool things.
But they’re not inevitable. You have options out there. You have choices out there. And there’s lots of reasons why this happened. But the biggest one, by far, was mobile. Microsoft missed the mobile moment. They tripped when it came to mobile. Because they didn’t want to upset the status quo they enjoyed with the desktop or the browser.
They were too afraid of hurting their core business to innovate in the ways that they probably should. And that’s what I think is happening to Google right now. You know that every quarter I take a look at the, uh, Big Tech earnings to see what they tell us about the current state of digital. And that’s what I see happening to Google right now.
They’re missing the AI moment in the same way that Microsoft missed the mobile moment. Now, I often talk about how Google might fail, particularly because so many of you depend on Google for so much of your traffic and so much of your business. I actually couldn’t care less what happens to Google as a company.
I care a lot about what happens to your business if Google goes away. And when I talk about how Google might fail, I might get a little hyperbolic sometimes. I don’t mean to suggest that Google will go out of business. What I do mean is, like Microsoft in the late aughts and early 2010s, Google could lose their cultural and technical dominance.
And that’s a huge issue for you if they lose mind share and market share. But to put this in terms that matter to Google, they made 86 billion dollars in revenue last quarter. Almost 300 billion dollars in revenue last year. And 76 percent of their revenues come from advertising. Most of that from search.
Uh, Ruth Porat, the company’s chief financial officer said search remained the largest contributor to revenue growth. And as new tools come around, new AI tools come around, we may see, and I would argue we are starting to see, People shift from using Google quite as much as they used to. Satya Nadella, Microsoft’s CEO, said that they saw both Edge and Search, Bing, gain market share in the last quarter.
Now, it might only be a point or something, but a point when you’re talking about a 300 billion business is a lot of money, right? If Google Search were to lose 20 percent of their dominant share, as Microsoft Windows has done, that’s 46 billion in lost revenue. I’m not even suggesting that they’ll lose 90 points of market share as Microsoft’s browsers have.
Just 20 percent of search. That would be a crushing blow for Google. 46 billion is more than Facebook has ever made in a single quarter. And theoretically, Google could lose that. That doesn’t mean they go away. They could still have immense market share. But if they went from 75 percent of the market to 25, uh, 55 percent of the market, that’s massive.
And it’s what I feel like I’m seeing in big tech’s quarterly earnings. Google lacks vision. I asked that as a question last year. There’s an episode where I asked, does Google lack vision? Now I’m stating it outright. The difference in what each of the big tech firms talked about in terms of where their companies are going and where their companies are growing and where Google is talking about is night and day.
I’m going to start with Microsoft. And I’m probably not going to talk too much about the money that everybody made. You can look this up easily enough, but they did great. In their comments, in their answers to questions, in their prepared remarks, Microsoft referenced artificial intelligence 117 times in an hour long presentation.
So that’s, you know, two a minute. Now, I want to be fair, about half of those were references to CoPilot, which is their product strategy for how they’re putting Microsoft, uh, how they’re putting AI into their various products. The other players have a more fragmented product strategy, and they’re not talking about them in quite the same way Microsoft was, so it’s tough to, you know, uh, compare apples to apples there.
But Satya Nadella, as he often does, made the quote of the day where he said we’ve moved from talking about AI to applying AI at scale. I talked about this in a podcast episode a few weeks ago. This is the next challenge for you as a marketer. For you as a business professional. It’s about putting AI to work, whether it’s in marketing, whether it’s in sales, whether it’s in operations.
It’s about putting AI to work. It’s not enough to talk about it. You’ve gotta apply it, and if you’re Microsoft, apply it at scale. Nadella referred to this AI moment, just the whole idea, like mobile, that AI is the thing that we must all get our arms around today. And he laid out such a compelling vision for where the world is going.
He said that their own research, as well as external studies, quote, show as much as a 70 percent improvement in productivity using generative AI for specific work tasks. And overall, early co pilot for Microsoft 365 users were 29 percent faster in a series of tasks like searching, writing, and summarizing.
He went on to say that it, generative AI, is going to have a very, very foundational impact. And my favorite thing that he stated was he said the demand signal, the deployment signal, it’s faster than anything else because it’s easier, right? I mean, it sort of shows up in your apps, you click on it like any ribbon thing, and it becomes a daily habit.
I’m quoting him at some length here. He said, in fact, it reminds me a little bit of sort of back in the day of PC adoption, right? It first starts off with a few people having access. PCs became standard issue at some point after PCs being adopted by early adopters. I think that’s the cycle that at least we expect.
This is a key point I’m saying. AI is becoming already a thing, just a thing. It becomes invisible as all technology becomes invisible. It just becomes something we use. Now when I say technology becomes invisible, a light switch is technology. You probably never even think about it. Air conditioning is technology.
You probably never think about that. Your phone is technology, but often you don’t even think about that. It’s just a thing you pull out of your pocket and use. And AI is beginning to show that same behavior pattern. This is what I mean when I talk about having vision. Again, Nadella laid out this really clear use case of summarizing documents, of drafting emails or documents, of chat and the way that you can chat with your documents.
This is an amazing statement. He said, The database of your documents and communications now queryable by natural language in a powerful way. I can go and say what are all the things Amy said I should be watching out for next quarter and it will come out in great detail. You’ll see work and workflow change as people summarize faster, draft regulatory submissions faster, chat to get knowledge from your business.
It’s going to be standard issue like a PC. I mean that’s That’s amazing in terms of being clear about where we’re going with this. He had a funny line, he said, If you take away a spell check from Word, I’ll be unemployable. And similarly, it’ll be like GitHub Copilot becomes core to anybody who is doing software development.
It’s not just tools, it’s about productivity of your dev team. Now obviously, Satya Nadella is talking about. Developers, but scale that to your marketing team, your finance team, your operations team, your legal team, and so on. That’s a compelling portrait of where they think they’re going, where they think we’re all going.
And they weren’t the only ones. Mark Zuckerberg on Facebook’s earnings call also laid out an incredibly compelling vision. And when you think about it, you know, Facebook has had some ups and downs over the last couple of years, but they had an amazing quarter. They’re, they’re doing tremendous, tremendous work.
One of the things that Mark Zuckerberg said among his 74 references to AI or Artificial Intelligence was a major goal will be building the most popular and advanced AI products and services. If we succeed, everyone who uses our services will have a world class AI assistant. To help get things done, every creator will have an AI that their community can engage with, every business will have an AI that their customers can interact with to buy goods and get support, and every developer will have a state of the art open source model to build with.
He talked about how they’ve been working on general intelligence, artificial general intelligence, for more than a decade. And he believes that that’s going to be necessary to reach the next generation of services. I don’t know that he’s right. I’m not qualified to know if he’s right or wrong. But he said, we’re going to need our models to be able to reason, plan, code, remember, and many other cognitive abilities in order to provide the best versions of the services that we envision.
Again, very clear vision of where they want to go and where they believe we’re all headed. And I want to be fair. They’re still talking about things like smart glasses. They’re still talking about the metaverse. And they’re talking about how you tie the metaverse together. How they will need to be connected to work well.
He said people are going to want new categories of devices that let you frictionlessly engage with AIs throughout your day without having to take out your phone and press a button and point it at what you want it to. That’s compelling. I don’t know that he’s right, but it’s compelling about how these devices might work together.
And they’re executing really well. I’ve talked many times before about ideas are one thing, but you have to be able to execute. They launched Threads, uh, six months ago, seven months ago. It already has more than 130 million monthly actives, which is amazing, amazing, given how hurriedly introduced it was while Elon Musk started burning Twitter to the ground.
It’s made it to about a quarter of the size of Twitter in roughly six months. That’s remarkable. That’s clear execution, clear focus on execution in a way that’s working really well for them. And it’s clear that they have a vision of where they want to go. Now some of this might be because their growth is slowing in other areas.
Um, you know, it’s tough for them to get much bigger. Uh, uh, Microsoft said, excuse me, Microsoft, Mark Zuckerberg said, At least 3. 1 billion people use at least one of our apps each day. That’s basically two out of every five people you encounter in a day. They’re using one of Meta’s apps, whether it’s Instagram, whether it’s WhatsApp, whether it’s Threads, whether it’s Facebook.
And they had said that they’re going to stop reporting Facebook specific metrics, probably because its growth has slowed down enough that all the growth is coming somewhere else. . The last thing I wanna say about Facebook before I move on to the next player in our game here is that they said that they’re increasing their capital expenditures, their investments in infrastructure, people, and products by about $2 billion this year, up to about $37 billion this year.
Now. We’ve heard a lot about tech layoffs in the last year, including in the last six months. That’s true for many of the big tech players. They’ve been having layoffs all over the place. However, what I think we’re seeing since I started this episode talking about things back in the, you know, aughts and, uh, late nineties and the like is there was a term that used to get used a lot called right sizing, right?
You weren’t downsizing. You were right sizing where we’re losing people in one area because we need people in another area. And if you look at most of the big tech companies, First of all, they still have way more employees, in many cases 50 percent more than they did at the beginning of the pandemic.
Secondly, they are hiring. Um, one of the things that Facebook’s CFO talked about was that they’ve had a current hiring underrun. You know, which is a fancy way of saying we need more people, especially those with technical skills. Facebook specifically has cut about 20, 000 people in the last year, but that’s after they almost doubled in the size between 2019 and 2022.
They went from about 45, 000 people in the company to 86, 500. They’re still at almost 65, 000 folks, roughly 20, 000 people larger than they were pre pandemic. So, for all the doom and gloom, and I want to be fair, it’s unfortunate for the people who get laid off. It’s terrible for the people getting laid off.
They clearly are still hiring and bringing people in. They’re just trying to be lean. Not small. They’re trying to invest in resources, in people, where they have the greatest opportunity for success. Which they clearly see as AI and the Metaverse, but again, it’s a clear vision. Amazon. I want to talk about them.
They had 41 artificial intelligence references in their, in their earnings call. Andy Jassy, uh, and Brian Olszewski, their CFO. Um, they talked about new personalized size recommendations powered by AI. They talked about Rufus, its new generative AI powered conversational shopping experience. They talked about new generative AI ad solutions for lifestyle imagery.
They talked about Q, its coding companion for developers. By the way, Andy Jassy said, if you can get 30 40 percent better productivity for your developers, it’s a game changer. They talked about something called AVI, it’s Automated Vehicle Inspection Tool for Amazon Delivery Vans. They’re investing in AI at every part of the value chain.
And, I can’t, I cannot hesitate enough, I can’t emphasize enough, excuse me, talking about how Speaking of vision, Amazon increasingly looks like Buy and Large. If you remember Pixar’s film WALL E, you know, Buy and Large had everything. Amazon literally is the everything store. And I don’t just mean in terms of things you can buy, but in terms of all of their various offerings.
They have shopping, as we well know. They have Amazon Web Services, as we all know. So you can host, you know, websites or apps or things like that. They have Amazon Prime Air for delivery. They’ve released 16 films and TV shows from their MGM subsidiary. They broadcast Thursday night football. They’re now gonna start selling cars in collaboration with Hyundai.
They’ve got a new healthcare division that they’re doing. They’ve got satellites through its Project Kuiper subsidiary. They design their own computing chips, though, to be fair, that’s pretty much true across all of the big tech companies. But Amazon’s customers include Anthropic, Airbnb, Qualtrics, Ricoh, Snap.
They really are the everything store. And when you talk about vision, one of the most remarkable statements from Andy Jassy was when he said about their investments in something called One Medical, or their partnership with something called One Medical. He said, I think that the healthcare experience, particularly in the U.
S., is a pretty frustrating one, not a very good one. I’m skipping a bit here, but he says, when we tell our grandkids that the way you used to have to go get primary care was to make an appointment three weeks in advance and then drive 20 minutes to the doctor, park, wait in the reception for 15 minutes.
Get put in an exam room for 15 minutes, doctor comes in, talks to you for 5 to 10 minutes, and then you’ve got to drive 20 minutes to the pharmacy. Our grandkids will not believe that that was the experience. And it’s not going to be. Again, vision, and they see themselves powering this. Just like Facebook, just like Microsoft, they are doing a, they’re saying we anticipate CapEx, capital expenditures, to increase year over year, primarily driven by increased infrastructure to support growth of our AWS business, including investments in generative AI and large language models.
Vision. They have a vision. Last people I want to talk about before I beat the hell out of, I mean before I talk about Google, is Apple. Who I will spend very little time on, but no pun intended, not only do they have Vision, they launched their Apple Vision Pro VR headset the other day. Um, I have thoughts about this, it’s gonna take too long to talk about, it’ll be another episode.
But, it’s something that, you know, Apple has over 2. 2 billion active devices out there. And, they’ve said that, uh, this is a quote, We’ve always said we will never under invest in the business. We are making all the investments that are necessary throughout our product development, software development, services deployment.
And so, we will continue to invest in every area of the business at the appropriate level. And Tim Cook talked about we’ve got some things that we are incredibly excited about that we’ll be talking about later this year with regard to AI. I think there’s a huge opportunity for Apple with Gen AI and AI, and without getting into more details and getting out in front of myself, um, that’s kind of where he tailed off.
So they didn’t talk about AI as much as other people, but they clearly see opportunities here. So, what did we hear from Microsoft? We heard Vision. What did we hear from Facebook? We heard Vision. What did we hear from Amazon? We heard Vision. What did we hear from, uh, Apple? We heard Vision. Pun kind of intended.
What did we hear from Google? We heard a lot about how much they depend on ads. They get almost, like I said, 76 percent of their revenues from, uh, ads. Search remaining the largest individual contributor to revenue growth. They said, we entered 2024 with advertising revenues of more than a hun more than a hundred billion dollars higher than 2019.
They talked a lot about how subscriptions like YouTube Premium and YouTube Music are driving revenues for them. That’s great, but again, it’s selling content. They talked about AI about 76 times, um, either AI or Gemini and their AI models. And when they talked about Gemini, what did they talk about?
Automatically created assets, a big component of their ads platform. This is a quote, uh, early tests show advertisers are building higher quality search campaigns with less efforts, especially SMBs who are 42 percent more likely to publish a campaign with good or excellent air strength. Philip Schindler, their, uh, chief business officer said, AI has been at the core of our advertising products for a very, very long time.
They talked about, we are surfacing more links within search generative experience and linking to a wider range of sources on the results page and will continue to prioritize approaches that add value for our users and send valuable traffic to publishers. Ads will continue to play an important role in the new search experience and will continue to experiment with new formats native to SGE.
What? That’s their vision. Their vision is more ads. That’s it. That’s all they talked about. And I feel bad, because they talk a little bit about what they’re doing for developers, and they talk a little bit about the challenges that they have with search, which I agree with. Search is a hard problem. I’ve not built anything to the scale that Google has, obviously.
Obviously. That’s like the understatement of the decade. You should roast me for that one. Um But I built search engines. They’re hard. Um, you know, one of the, one of the remarkable quotes, uh, uh, from, um, Sundar Pichai was he said, One of the things I think people underestimate about search is the breadth of search.
The amount of queries we see constantly on a new day, which we haven’t seen before. You know, if you think about the scale problems that Google has to solve for, that’s crazy. There are roughly 6 million searches every minute, roughly 8. 5 billion searches every day. That’s nuts! If even 1 percent of that 6 million searches per minute are brand new, that’s 60, 000 new searches every minute, 3.
6 million brand new searches every hour, 86. 5 million brand new searches every day, and almost 605 million brand new searches every week. And they gotta work hard to figure out how to put ads alongside them. Oh, wait, I’m not the only one criticizing them here. You probably saw one of their software engineers a couple weeks ago, wrote a lengthy piece on LinkedIn savaging the leaders, saying they don’t have a visionary leader within the company.
I wrote that or I said that in a podcast three months ago. She just came out and stated it as cold hard fact. And to bring us back to where I started this episode. That’s a huge problem, not just for Google, but for you. Because that’s how Google will lose market share. If they keep putting their emphasis on how do we create more ads, and how do we put ads alongside the things that people search for, and not into how do we make a better search product, how do we message that product better, how do we come up with a coherent product strategy rather than Gemini and Bard and Gemini Ultra, and all of these other different things that they’ve got out there that are too confusing.
Nexus, you know, just an amazing number of tools that aren’t clear to people. As opposed to Microsoft with Copilot, period. You know, Bing Copilot? Sure. Edge Copilot? Sure. 365 Copilot? Sure. But it’s always Copilot. That’s a clear vision, and Google, flat out, isn’t showing it yet. And to go back to the beginning, the reason I care, the reason that it matters so much, is because you get a lot of your business from Google.
If you’re like most businesses out there. And so you need to be thinking today about what do I do if Google drops by 10 points? What do I do if Google drops by 20 points? How do I ensure that the way I get my customers isn’t just by buying more ads on Google? Because that’s not a winning strategy.
That’s not winning for you in the long run. And then it won’t be Google’s lack of vision that’ll be a problem. It’ll be your own. Google today might feel like Microsoft did 20 years ago, where resistance is futile. You’re dominant. They’re dominant. You don’t have a choice. But you have a lot of choices.
And what their vision, or lack thereof, should show you, is that it’s time for you to make those choices. Starting with, how do you get more business from people who aren’t Google?
Show Wrap-Up and Credits
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