Google vs. ChatGPT – Scroogled again?

ChatGPT has Google needlessly rattled.

• Google has published a thinly veiled push-back against the notion that ChatGPT is a threat to its core search business demonstrating that ChatGPT has made Google nervous.
• I continue to think that there is no way that ChatGPT is in a position to replace Google anytime soon and so this is more of a PR exercise rather than a bail-out of a sinking ship.
• Google has published a blog from its CEO and the leading AI executives in the company explaining why it focuses on AI and what it hopes to achieve (see here).
• The blog is disingenuous from the start as Google claims that it focuses on AI to organise the world’s information and make it universally accessible and useful but leaves out the fact that it does this to make money.
• It then goes on to say that it is at the cutting edge of AI and uses its innovations to bring useful tools to people which is absolutely true as RFM still ranks Google as the best in this field and many of the services that it has created using its learnings are second to none.
• Google goes on to discuss the complexity and risks of AI and how it takes all of this into account when deciding what to release for general consumption.
• This is a thinly veiled swipe at OpenAI and ChatGPT which has already been widely demonstrated to be very effective at spreading untruths and misinformation who Google seems to view as a bunch of cowboys willing to release anything for general consumption.
• Google has a point because if ChatGPT causes repeated issues, it could undermine the public’s trust in AI which would obviously also reflect badly on Google.
• This is very similar to what is happening in the autonomous driving industry where Tesla’s rhetoric has been proven to be very far from reality and given all the other players reputational problems.
• However, what really lies at the heart of this discussion is a rebuttal of the notion that ChatGPT can rival Google Search which is something with which I wholeheartedly agree.
• For example, ChatGPT needs its data to be frozen in time in order to work properly which is useless for search and ChatGPT has no ability to deal with the long tail of search (see here for more details).
• Freshness and the long tail are two things that Google excels at and are why people continue to use Google for search despite the presence of perfectly decent rivals.
• Hence, if Google’s valuation unravels further on the back of this idea, there might be an entry point in the shares.
• However, as it stands at the moment, the shares look fairly valued and I continue not to have a strong view on the stock one way or the other.
• My top pick for 2023 in large-cap tech has to be the Chinese technology sector which stands to benefit from the reopening of China as well as a larger economic stimulus as the CCP seeks to get back in the people’s good books.
• None of this is priced into the sector which remains widely hated and very cheap as a result.
• Alibaba is up 83% from its low and still looks extremely cheap.
• I am sitting tight.