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Is Google dead?
- Xavier Van Hove
- Oct 7
- 4 min read
Yes, this is (another) piece is about AI. It's a potential extinction-level event it represents for Google’s business model. With so many unknowns, history may be our best guide.
The world’s oldest business, Nishiyama Onsen in Japan, has been serving guests since 705 AD. Most tech companies are nowhere near this resilient. They burn bright and fast – supernovas that dominate, then disappear.
A few companies have cheated death. IBM pivoted from mainframes to consulting. Canon and Nikon survived the digital photography revolution.
But they’re the exceptions. If resilience were the rule, the “Magnificent Seven” of today would still be tech stocks of the 1970s “Nifty Fifty”: Xerox, DEC, IBM, Kodak, Polaroid, Motorola and HP.
Studebaker
Founded in 1852, Studebaker was America’s largest manufacturer of horse-drawn carriages by 1900. The company recognised early that the future belonged to automobiles and attempted to pivot for a time, successfully. Its cars were reliable, stylish, and well-regarded.
However, Studebaker moved too late to compete with Ford and General Motors. It never achieved comparable production volumes, and without scale, it couldn’t match their manufacturing efficiency or marketing reach. R&D, distribution, and advertising costs had to be amortised over lower volumes, forcing the company to sell vehicles at a loss, leading to its eventual demise in 1968.
Nokia
Likewise, Nokia knew about touch screens. They had experimented with screen phones in the early 2000s, and even commercialized some of them. However, it viewed these as side projects rather than an essential do-or-die mission.
When the iPhone came out, they rushed out a relatively a clumsy response (the 5800), which sold poorly. Nokia did eventually rally and produced a gorgeous touch screen phone (the N9) with a good operating system (Meego). But it was too late. Apple and Google's Android had already created the duopoly that still dominates the market today.
Kodak
Kodak may be the most revealing case of all. The company understood that digital imaging would disrupt its lucrative film business and attempted a compromise: the Advantix Preview, a hybrid camera that used both digital and film. It did about as well as you can imagine.
The parallel with Google’s current strategy – layering AI summaries on top of its existing search model – is striking. Both reflect the same instinct: acknowledge the future, but preserve the cash cow.
We've left out many other examples for conciseness, but if you are interested in exploring this further, then check out Blockbuster (1985-2014), Radio Corporation of America (1919-1987), Polaroid (1937-2001) and Digital Equipment Corporation (1957-1992) and of course Blackberry (1984-). All had the same thing in common: they knew the world was changing, they tried to pivot, they failed.
Back to Google, whose Q2 earnings were its best ever. This is not unusual, Nokia released had its best revenues in 2007, the year the iPhone came out, grossing €51bn in that year. Of course, Nokia didn't immediately die, its revenues in 2024 were a commendable €19bn, but Apple is valued at $3tn, whilst Nokia is a shadow of its former self.
Some argue that ChatGPT has been out for nearly three years and Google is still thriving. But that misses the point – we’re early. Google's advertising business model hasn’t been tested yet. Perplexity has begun experimenting with ads, but monetisation isn't yet a priority for most AI startups. When it does – and it will – Google faces an existential threat. Ad spend will shift to what users are consuming, which is increasingly AI chats, not search engines. And advertising drives 75% of Alphabet’s revenue, and Google Search is the bulk of that.
Whilst Google's revenues have grown fast, overall advertising spending growth has been more stable. Google’s dominance came from the migration of budgets from print, TV, and local media to the digital world, where it and Meta have held a near-duopoly for almost two decades. As online platforms began competing for the same pool of spend, the internet suffered what Cory Doctorow famously called “enshittification.”
Now, history may not repeat, but it rhymes. Like so many tech giants of their day, Google knows better than most the threat AI represents to its business model - OpenAI and others are building products that outperform its search engine in core functionality. It is trying to pivot, but its efforts seem clumsy, with Kodak-like hybrid solutions. This isn't enough.
For Google to survive, history would suggest it needs to drop the hybrid approach and go all-in on AI, replacing it search results with AI chats. Whether it does so in time to survive the coming onslaught, remains to be seen. And no matter what it does, it seems unlikely it will dominate AI the way it once dominated search.
So what makes us qualified to voice an opinion? Nighthawk lends to startups from Seed through Series C, giving us an early view of what’s coming. AI is already reshaping every sector – from construction risk assessments to our own business of loan underwriting. If you'd like to hear more, get in touch.
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