According to Bloomberg Business, Google’s stock dropped 8% in a single day back in February 2023 following the horrible rollout of its Bard AI chatbot. Venture capitalists Ben Gilbert and David Rosenthal discussed this on their podcast Acquired, arguing this failure actually became a blessing in disguise. Two years later, a US federal judge ruled that Google had illegally monopolized online search but concluded artificial intelligence would naturally create new competition. The judge decided Google didn’t need significant business changes because the looming AI threat would solve the monopoly problem. Rosenthal noted that despite Google being “flat-footed” when ChatGPT emerged, avoiding Microsoft-level legal damage made the Bard failure “worth it” and potentially saved the company.
The Competition That Isn’t Coming
Here’s the thing about this ruling – it assumes AI will naturally create meaningful search competition. But does that really track? Google controls over 90% of search, has unimaginable data advantages, and can afford to lose billions on AI experiments that would bankrupt smaller players. The idea that some plucky startup will suddenly dethrone them because they have a good chatbot seems… optimistic at best.
When Failure Becomes Strategy
What’s fascinating is how Google’s very public AI stumble became their legal salvation. They looked vulnerable, they looked beatable – and that perception gave regulators cover to say “the market will handle this.” Meanwhile, Google continues earning $60 billion per quarter while everyone waits for this magical AI competitor to materialize. It’s basically the perfect outcome for them – appear threatened while maintaining complete dominance.
The Search Monopoly Math
Let’s be real – search is an economic moat that makes medieval castles look like picket fences. The infrastructure costs alone are astronomical, and Google’s two decades of user data creates a feedback loop that’s nearly impossible to break. Even if someone builds a better AI search product, how do they compete with Google’s distribution through Android, Chrome, and thousands of partnership deals? They don’t. And regulators seem perfectly happy to accept the theory of future competition rather than demanding actual competition today.
The Regulatory Dance Continues
So where does this leave us? Google gets to keep its monopoly because AI might someday challenge it. Meanwhile, the company that actually has the resources to compete – Microsoft – is already deeply partnered with OpenAI. The whole situation feels like regulators kicking the can down the road while Google’s search business continues untouched. Sometimes the best defense is looking vulnerable at exactly the right moment.
