Alphabet’s Google is preparing to launch a wave of artificial intelligence upgrades during its annual I/O developer conference in Mountain View, California, signaling its heightened focus on AI innovation as it faces increasing scrutiny over the future of its search empire.
Once comfortably seated as the internet’s go-to information gateway, Google now finds itself under mounting pressure following the explosive rise of generative AI technologies. This year’s I/O comes with a sense of urgency, as the company works to reassert dominance in a space it once led without contest.
Google has intensified its public messaging in recent months, aiming to show it has regained its footing after OpenAI’s ChatGPT—backed by Microsoft—momentarily seized the spotlight. Top leaders, including CEO Sundar Pichai, have proudly highlighted Gemini, Google’s flagship AI model family, which is currently outperforming rivals like OpenAI and Meta on several AI benchmarks.
As generative AI continues to evolve beyond novelty and into everyday utility, investors are closely watching whether Google will disrupt its own highly profitable search advertising model—a pillar of its $350 billion revenue in 2024.
That business showed signs of vulnerability earlier this month when Alphabet shares plunged by $150 billion in a single day. The drop came after a bombshell courtroom revelation: an Apple executive testified that AI tools had led to fewer searches via the Safari browser for the first time ever
These developments have caused some analysts to revise long-held assumptions about Google’s iron grip on search. While traditional metrics still place its market share near 90%, new analyses—accounting for the growing use of AI chatbots—suggest that figure could be closer to 65–70%. Some forecasts from Wells Fargo even predict a drop below 50% within five years, as user behavior shifts toward AI-first interactions.
Further compounding the pressure are ongoing legal challenges, particularly two antitrust cases filed by the U.S. Justice Department. A worst-case outcome could force Google to divest key assets, such as its Chrome browser.
Despite the turbulence, Google is doubling down on AI investment. The company expects to spend $75 billion in capital expenditures this year—up sharply from $52.5 billion in 2024—with AI receiving the lion’s share. CEO Pichai reaffirmed this commitment last month, even amid broader economic uncertainty.
Over the past two years, Google has gradually integrated AI into its search engine through features like AI Overviews—short, generated summaries that appear above traditional search results—and the experimental AI Mode, which handles more nuanced queries. Tuesday’s keynote is expected to expand on these tools, potentially bringing Google closer to its vision of a “universal AI agent.”
One such tool, Project Astra, was introduced in prototype form at last year’s conference. The system is designed to interact with users in real time based on what they see through their smartphone cameras.
Google has cautiously tested AI-related advertising as well, inserting ads into AI Overviews last May without making sweeping changes to its core model. At the same time, the company is ramping up efforts to monetize AI through alternate channels.
One such success story is the Google One subscription service, which recently surpassed 150 million subscribers. A significant number of those are paying for the $19.99-per-month premium tier, which offers access to advanced AI features unavailable to free users.