Google's Two Truths

Is Google a Monopoly or an Underdog?

It is a little weird to be in a position where you must simultaneously convince one group of powerful people that your business is an unstoppable juggernaut, and another group of powerful people that your business is on the verge of collapse. But that is the high-stakes tightrope Google is currently walking.

To Wall Street, its executives are on a campaign to convince investors that AI is a powerful enhancement to its search empire. To regulators and judges, its lawyers are arguing that AI is a grave, existential threat that proves its search business isn't a monopoly at all. The Wall Street Journal's Tim Higgins nicely captured this strategic schizophrenia:

Liz Reid, the Google search boss, has a tough job. She's going around trying to convince the public that artificial intelligence hasn't killed Google's golden goose—the search business that makes up more than half of parent-company Alphabet's sales. At the same time, Google's lawyers are working to convince federal judges determining the company's fate that, in fact, AI poses a huge threat to its monopoly businesses.

..."This is really an expansionary moment," [Reid] said. "So both Google can grow very successfully, and other people can grow successfully."

The argument for AI as a business enhancer is straightforward: AI is making search more useful, which leads to more queries and, ultimately, more revenue. The proof is in the numbers. Search revenue in the most recent quarter grew 12% to a record $54.2 billion.

The argument for AI as an existential threat is equally straightforward, and is deployed whenever a jurist is in the room. In its landmark antitrust trial, Google's lawyers successfully used the "threat" of generative AI to argue for lighter remedies. Judge Amit Mehta explicitly wrote that "The emergence of GenAI changed the course of this case."

The strange thing is that both arguments are, to some extent, true. AI is simultaneously a powerful enhancement to Google's existing products and a genuine long-term threat to its business model. The market data reflects this paradox: while Google's total search queries are up, its market share has eroded slightly, falling below 90% for the first time in a decade.

The core of Google's power, of course, remains its immense distribution advantage. As Microsoft CEO Satya Nadella testified during a court case back in 2023, even with a powerful AI, it's nearly impossible to compete with a company that is the locked-in default on billions of devices. Here's Nadella on Google's grip on the market:

The distribution advantage Google has today doesn't go away. In fact, if anything, I worry a lot that—even in spite of my enthusiasm that there is a new angle with AI—this vicious cycle [of Google's dominance] that I’m trapped in could even become even more vicious because the defaults get reinforced.

For now, Google is masterfully walking the tightrope, telling two different stories to two different audiences. The risk is that one of them stops believing. It is a precarious balancing act, simultaneously projecting the image of an innovative AI powerhouse and a vulnerable incumbent besieged by competition.

On Our Radar

A curated look at key signals from the ARPU Intelligence Desk

Nvidia & Hitachi: AI for the Industrial Frontline

• The Headline: Japan's Hitachi is deploying an Nvidia-powered multimodal AI system to guide and automate elevator maintenance, aiming to cut the required workforce in half. (Nikkei Asia)
• ARPU's Take: This is a prime example of AI's tangible ROI in traditional industries. Hitachi is addressing Japan's core economic challenge: a shrinking workforce. The AI acts as an expert co-pilot, making less-experienced technicians radically more efficient. For Nvidia, this is a crucial enterprise win, proving its platform's utility extends far beyond training LLMs.
• The Strategic Implication: The era of AI moving from the data center to physical, real-world applications has begun. AI companies that can demonstrate clear, quantifiable ROI in non-tech verticals will have a massive competitive advantage. This puts pressure on pure software players to prove their AI can deliver more than just productivity gains in an office environment.

Salesforce vs. ServiceNow: The Platform Wars Expand

• The Headline: Salesforce is directly challenging market leader ServiceNow with the launch of Agentforce IT Service, a new IT Service Management (ITSM) product built on its unified platform. (CX Today)
• ARPU's Take: This is a classic "land and expand" strategy, weaponizing Salesforce's massive 60,000+ Service Cloud customer base. The pitch is simple: why buy a separate ITSM solution when you can activate a native, AI-powered one inside the platform you already use? This is a direct assault on ServiceNow's core market.
• The Strategic Implication: By unifying customer, employee, and IT service on a single data model, Salesforce is creating a powerful Total Cost of Ownership (TCO) argument. This forces competitors like ServiceNow to defend their value not just on features, but on the switching costs and integration risks of moving away from a single, unified platform.

These are select insights from the ARPU Intelligence Desk. The full platform provides the continuous signal tracking and comparative analysis required for professional work.

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