Inside Google’s Two-Year Frenzy to Catch Up With OpenAI

Inside Google’s Two-Year Frenzy to Catch Up With OpenAI

  • 21.03.2025 10:14
  • wired.com
  • Keywords: danger, success

Google scrambled to catch up with OpenAI after lagging in AI chatbots, facing pressure from investors and reorganizing its teams to build Gemini, which eventually outperformed ChatGPT in key tests despite initial setbacks.

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Estimated market influence

Google

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Analyst rating: N/A

Google's AI efforts were negatively influenced by OpenAI's advancements.

OpenAI

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Analyst rating: N/A

OpenAI's success in AI has pressured Google to accelerate their own developments.

Context

Analysis: Google's Race to Catch Up with OpenAI

Market Dynamics

  • 100-Day Sprint: Google allocated 100 days to build a ChatGPT rival under Sissie Hsiao, highlighting the urgency driven by OpenAI's success.
  • Stock Impact: Alphabet shares dropped 39% in 2022, reflecting investor concerns about Google's AI lag and market dominance.

Competitive Landscape

  • Layoffs and Restructuring: January 2023 saw Google's first mass layoffs (12,000 employees, ~7% workforce) to reallocate resources for AI development.
  • New Division Formation: The merger of DeepMind and Google Brain into Google DeepMind (GDM), led by Demis Hassabis, aimed to accelerate AI advancements.

Product Development

  • Bard's Launch Issues: Bard faced significant challenges, including incorrect information about the James Webb Space Telescope, leading to a 9% drop in Alphabet shares (~$100 billion loss).
  • Gemini vs. GPT-4: Gemini outperformed ChatGPT in 30/32 tests, showcasing improved capabilities but highlighting ongoing issues with content safety and bias.

Internal Challenges

  • Resource Allocation: AI researchers in non-core areas (e.g., healthcare) faced server shortages and morale issues due to prioritization of Gemini.
  • Publishing Restrictions: Google limited AI research publications to prevent aiding competitors, emphasizing the need to protect proprietary model training techniques.

Strategic Considerations

  • Partnerships and Investments: Collaborations with Microsoft were strategic moves to counter OpenAI's integration into Bing, while internal investments in long-context memory (e.g., Goldfish project) aimed to differentiate Gemini.
  • Regulatory and Ethical Concerns: Discussions around AI safety, job displacement, and ethical use dominated, with Google facing pressure to balance innovation with responsibility.

Long-Term Implications

  • Market Leadership: The race to restore Google's AI leadership position has reshaped its culture and strategic focus, potentially affecting long-term innovation in other areas.
  • Investor Sentiment: Despite initial setbacks, Alphabet shares rebounded post-Gemini launch, signaling investor confidence in Google's AI strategy.

Key Takeaways

  • Google's aggressive pivot to AI underscores the criticality of staying ahead in generative AI to maintain market dominance.
  • Internal restructuring and increased competition with OpenAI have reshaped Google's priorities, impacting both its workforce and external partnerships.
  • The focus on rapid development has raised ethical and safety concerns, highlighting the need for balanced innovation strategies.