Google is moving fast again — but big problems cloud its path

• Google wants everyone to know it's moving fast again.
• It showed off new AI features and devices at its "Made by Google" event on Tuesday.

When ChatGPT first arrived, much was made of why Google wasn't the company behind it.

The search giant, after all, owned the world-beating AI lab DeepMind, released the research paper that laid the foundation for the large language model behind OpenAI's chatbot, and was putting its deep pockets to use for AI development. If any company was going to be the first to present generative AI in a neat, consumer-ready package, some thought it should have been Google.

The company may have gotten in its own way. It had become a classic case of what business guru Clayton Christensen described in 1997 as "the innovator's dilemma," in which an incumbent becomes complacent and cedes ground to younger companies with fresher ideas.

That said, Google has been determined to remind everyone of its ability to move fast and innovate, with the launch event for its latest AI-infused Pixel devices being its latest attempt to do just that.

During Tuesday's "Made by Google" event, brought forward from October, the company showcased the latest capabilities of its generative AI system Gemini across a suite of next-generation hardware, including new Pixel smartphones, a smartwatch, and buds.

Capturing imaginations

One standout feature included an "Add Me" function that allows users to add themselves to a photo they weren't originally in by taking another picture of themselves in the first photo's location and then letting AI combine the two.

Ben Wood, chief analyst at CCS Insight, said he expects the feature to "capture consumers' imaginations," with the photography and video capabilities shown off on Tuesday among "some of the most compelling AI-powered innovations" so far.

Google, of course, remains far off rivals like Apple and Samsung in the hardware space, with Pixel sales a fraction of the revenue generated by iPhone and Galaxy devices.

But after former devices boss Rick Osterloh took charge of a newly created division earlier this year combining its Android and hardware teams, the company has a fresh medium through which it can demonstrate the uses and advantages of Gemini.

Or put differently, Google has a chance to show that it's doing what critics said it wasn't doing back when the release of ChatGPT triggered a code-red warning internally: it's moving fast again.

What seems less certain than ever is its future destination.

Which way, Google?

While the company is racing to innovate in AI, it is facing several challenges that cast genuine uncertainty over where it'll end up in the future.

This month, a US federal judge ruled in a 286-page judgment that the company was not only a monopolist but "it has acted as one," handing it a brutal result in an antitrust case brought by the Department of Justice four years ago.

One drastic remedy to Google's monopoly being weighed by the DoJ involves breaking up the company, with "the most likely units for divestment" being Android and Chrome, according to a Bloomberg report published Tuesday.

Search remedy

Lawmakers failed to split Microsoft into two separate entities following a blockbuster antitrust case in the 1990s that saw the Windows maker also get tagged as a monopolist, so how much success they'd have trying to break up Google is uncertain.

But Google will be asked to make remedies in some shape or form that will loosen its grip on the tech sector. Another possible remedy, according to my colleague Alistair Barr, is Google making its search index publicly available.

Beyond its battle in court, the company has also been having a hard time convincing investors that its fancy AI developments are going to generate returns.

After reporting its latest earnings last month, the company struggled to convince investors that returns would be on the horizon as it doubles down on the spending needed to fuel its AI: capital expenditure almost doubled year-on-year in the quarter to $13 billion.

Investors haven't been kind in return. In the past month, Google's stock has dropped by almost 12%.

So yes, Google is moving fast again. Just don't be so sure about where it's going.