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lemmy - Link to source

Google just had its first negative cash flow quarter due to massive AI spending

Google just had its first negative cash flow quarter due to massive AI spending

Google continues to report big quarterly revenue, but its AI spending has skyrocketed.
Ryan Whitwam (Ars Technica)
#technology
in reply to along_the_road

vermaterc
lemmy - Link to source
vermaterc
• •

The question is what would happen if they didn't spend on AI.

People got used to instant answers from chatgpt and perplexity. If Google didn't follow, their market share would slowly drop

in reply to vermaterc

apotheotic (she/her)
lemmy - Link to source
apotheotic (she/her)
• •
Well with all the money they pumped into ai they could have instead worked on making their search engine better at returning relevant and accurate results. Then when people clocked the fact that ai was giving them 50% bullshit, they would realise the juice is worth the squeeze with actually getting accurate info
in reply to apotheotic (she/her)

MagicShel
lemmy - Link to source
MagicShel
• •
making their search engine better at returning relevant and accurate results


This isn't the goal. The goal is monetization. Giving good results is useless to them if they don't make piles of money doing it.

Which ironically means you're getting 50% bullshit from Google as well, but AI delivers it much faster.

(I'm agreeing with you if that isn't clear.)

in reply to apotheotic (she/her)

Auli
lemmy - Link to source
Auli
• •
Very true search is basically useless these days especially for technical stuff.
in reply to apotheotic (she/her)

BlaestEgnen
lemmy - Link to source
BlaestEgnen
• •

Google hit as big a market share as they could, so their way to grow the search machine was to increase the market.

How do you increase the market? By pushing the most relevant links further back, so people have to go to page 2, 3 or 4. So it's unfortunately the best financial decision, short term, to enshittify their main product

in reply to BlaestEgnen

EliteCloneMike
lemmy - Link to source
EliteCloneMike
• •
Their main audience isn’t the end user, but the shareholders. All that matters is they can say they are still “growing”. Which is why they don’t care about making things worse. Same goes for Meta. If something succeeds, it’s a happy accident secondary to the goal. Each of these companies did have a good initial idea that was fundamentally good and better than the competition, but ultimately will not last forever for reasons like this. Something else will eclipse them in time. History is full of corpses the likes of these companies. Recent tech ones include IBM, HP, and Microsoft. All big (or moderately big) players today sure, but not what they were at their prime and not close to the “main” ones anymore.
in reply to EliteCloneMike

BlaestEgnen
lemmy - Link to source
BlaestEgnen
• •

I do not agree Microsoft is in that category, but they're mainly a B2B player today.

A little less than 20% of revenue per earnings '25 was from consumers - The rest for business offerings. I'm curious to hear which selection of companies you consider the main ones. Because Microsoft is still top 5 within Tech when it comes to power.

FY25 Q4 - Segment Revenue and Operating Income - Investor Relations - Microsoft

www.microsoft.com
This entry was edited (19 hours ago)
in reply to vermaterc

LastYearsIrritant
lemmy - Link to source
LastYearsIrritant
• •

Would it? I turned off the AI answers from Google and most of the people I know also ask how to turn it off.

In my circle, most of the people I know are more annoyed by it than helped by it.

Also, they're getting sued in the EU by giving incorrect answers in the AI summary, cause that's actual info FROM Google instead of answers Google is pointing to.

Sure, there's Gemini that people are actively reaching out to for answers, but cramming it into their main product is way more of a miss for me and the people I know in real life.

in reply to LastYearsIrritant

Auli
lemmy - Link to source
Auli
• •
I use Gemini for search more then google these days. Wading through all the outdated and useless results is very annoying.
in reply to Auli

BlaestEgnen
lemmy - Link to source
BlaestEgnen
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It's mostly all of the generated by LLM websites that's annoying to shift through
in reply to Auli

LostCarcosan
lemmy - Link to source
LostCarcosan
• •

So you just let Gemini summarize and then make up and add random shit to the outdated and useless results for you?

Very efficiently lazy, indeed

This entry was edited (1 day ago)
in reply to LostCarcosan

EliteCloneMike
lemmy - Link to source
EliteCloneMike
• •
Even people who use AI in search would fall into that trap. The output is one thing, how you take it is another. I sounds like people mostly don’t check sources, which is the biggest problem. Not saying that person does or doesn’t check sources. Aside from that, Google forcing AI into search is fundamentally the opposite of their business model. If they don’t direct people to sites to buy stuff, how do they expect the sites that they are scrapping to survive? So they scrap and don’t pay and kill the source due to excessive energy demands? Only like Amazon could survive that. Google’s search should be a utility and Google should be broken up. In the meantime, I highly recommend people use DuckDuckGo or StartPage or Kagi (paid), or any other search engine that hasn’t been on a mission to destroy SEO in favor of advertising and AI.
in reply to along_the_road

raman_klogius
lemmy - Link to source
raman_klogius
• •
"In case of catastrophic [AI bubble] implosion, look directly at implosion." 😎🍿
in reply to along_the_road

Valmond
lemmy - Link to source
Valmond
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Feels like the innovative part of google does not exist any more.
in reply to Valmond

fodor
lemmy - Link to source
fodor
• •
Web search was the last big innovative thing they did. The other good shit since was bought up, lol, easier to buy than innovative. Capitalists hate competing because they might lose.
in reply to fodor

Markaos
lemmy - Link to source
Markaos
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What about "Attention Is A You Need", the white paper that kick-started the whole generative AI and LLM thing? OpenAI's GPT models are built off of that architecture, like pretty much everything that came after it.

Like sure, modern Google is notoriously bad at building the actual end products, but it publishes a lot of research and some of it pushes others forward quite a lot.

in reply to Markaos

Valmond
lemmy - Link to source
Valmond
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The LLM page was published in 2019 right? 7 years ago!
in reply to Valmond

no_name_dev_from_hell
lemmy - Link to source
no_name_dev_from_hell
• •
I think it was 2017.
in reply to no_name_dev_from_hell

EliteCloneMike
lemmy - Link to source
EliteCloneMike
• •
Yea, and the main discovery being transformers (GPT predecessor). That allowed for the groundbreaking technology of AlphaFold to come into being, for which a Nobel prize was awarded to Demis Hassabis and John Jumper (who just left Google DeepMind to join Anthropic).
in reply to Valmond

Markaos
lemmy - Link to source
Markaos
• •

2017, actually. But the search engine (supposedly the last innovation according to the previous comment) has seen most of its leaps forward in late 90s to early 2000s, which is a lot earlier.

Also it's pretty hard to find a more clear example of Google sharing well done research than the white paper that started the current AI bubble. But they do publish a lot of stuff.

in reply to Valmond

ragingHungryPanda
piefed - Link to source
ragingHungryPanda
• •

They've actually been doing a lot of innovative research around AI, they just done hype it up like companies that NEED AI to work for their business. Their Alpha fold was revolutionary for gene folding, for example. it's like 98ish percent accurate for a fraction of the compute time.

Now, as far as their customer products go, yeah, we haven't seen much lately, but I think their research arm is still doing a lot and they're publishing a lot of papers.

in reply to ragingHungryPanda

EliteCloneMike
lemmy - Link to source
EliteCloneMike
• •
Let me start off by saying I think Google should be broken up. I really don’t like that company. But I and glad that the publicized research that they have done has lead to benefits for humanity. Like they discovered the underlying technology behind GPTs, being transformers back in 2017. And then an extension on that being AlphaFold. I think those applications are great, like some others for the use of AI. I don’t think that using AI to call people criminals and lock them out of their account is a good use of the technology, and then not budging when those people are found innocent (there are many news articles on that topic). Google needs to be broken up and their search made into a public utility.
in reply to Valmond

Communist
lemmy - Link to source
Communist
• •
I did think it was sooner but I honestly don't think that's that long ago for such a big breakthrough, I dunno.
in reply to along_the_road

LastYearsIrritant
lemmy - Link to source
LastYearsIrritant
• •

Feels like this article got too excited about the headline and the actual meat of the text is lacking in context.

First negative quarter since when? Obviously Google didn't spawn wholesale making money. Had to look around and it's their first negative cash quarter since 2004 when it went public. (I assume there's no real public data before then)

The ars article says

To be clear, Google is still profitable—wildly so.


How can something be profitable, but also have negative cash flow?

Legitimately confused here. Is "cash flow" some hyper specific business term for a very narrow type of money exchange, while profit comes from a different line item?

This is a rare miss from ars, but a HUGE miss.

in reply to LastYearsIrritant

ryper
lemmy - Link to source
ryper
• •
How can something be profitable, but also have negative cash flow?


It's been about thirty years since I took an accounting class, but I think capital expenditures like this AI spending are amortized (deferred?) over several years and don't fully count towards present expenses. So the chunk that counts for this quarter/year can still be small enough to make the company profitable (income > expenses). Free cash flow I would guess is money that came in minus money actually spent, so something like a $1m capital expenditure might count as $100k for this year's expenses but the full $1m for calculating cash flow.

This entry was edited (1 day ago)
in reply to ryper

partofthevoice
lemmy - Link to source
partofthevoice
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Why can they spend money now, but make it so on paper it’s as if they spent it next quarter?
in reply to partofthevoice

ryper
lemmy - Link to source
ryper
• •
Capital expenditures are for things that are expected to last a long time, like buildings and vehicles, so I guess the accounting rules around them are meant to allow the costs to be realized over a similarly long time. The idea is probably that companies would be less likely to invest in capital if it meant taking a big hit all at once. But I'm not an accountant.
in reply to ryper

unknownuserunknownlocation
mbin - Link to source
unknownuserunknownlocation
• •
Yes, that's essentially it. Also, for instance, if a company buys something in one month and pays for it the next, then the costs apply to the first month, but it affects the cash flow on the second.
in reply to along_the_road

RamenJunkie
lemmy - Link to source
RamenJunkie
• •

"Negatice cash flow."

God I fucking hate corporate jargon double speak.

Sorry, not hate, I double minus good it.

in reply to RamenJunkie

Goodlucksil
lemmy - Link to source
Goodlucksil
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Negative cash flow means profits are down
in reply to Goodlucksil

Strive7307
lemmy - Link to source
Strive7307
• •
It‘s even net profits (after expenses) are negative, right?
in reply to along_the_road

supersquirrel
lemmy - Link to source
supersquirrel
• •
Fucking idiots, the entire management of Google is far worse than useless, more like economically suicidal.
This entry was edited (11 hours ago)
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