Google has altered its AI policy, dropping its previous commitment against military AI development established in 2018, citing changes in the tech landscape. While it still aims to adhere to international law and human rights, investor confidence waned after disappointing quarterly results, with stock falling despite revenue growth, particularly from election-related advertising. Google is investing heavily in AI infrastructure while seeking to improve search results with AI-driven features, even as its other projects face declining performance.
Google’s Shift in AI Policy Raises Eyebrows Among Investors
In a surprising move, Google has reversed its earlier commitment to refrain from developing artificial intelligence for military use. The tech giant has updated its AI principles, leaving out the self-imposed restriction that was initially established in 2018.
In a recent blog post, Google explained that the technological landscape has evolved significantly since 2018. However, the post did not delve into the motivations behind the omission of this critical commitment.
Interestingly, public figures like Elon Musk have made their political preferences clear, while others remain more reserved in their support.
General Statements on AI Ethics
The newly revised principles assert a commitment to aligning AI development with “widely accepted principles of international law and human rights.” This contrasts sharply with the 2018 commitment, which explicitly stated that Google would not create AI technologies capable of surveillance that contravenes recognized international standards.
Furthermore, Google has emphasized that it will not engage in projects that could be harmful in general. The original principles were established following pushback within the company regarding its involvement in a U.S. military drone initiative, highlighting the growing concern among experts who view AI as a potential global risk.
Investor Disappointment Amidst Revenue Growth
On Tuesday evening, Alphabet, Google’s parent company, disappointed investors with its quarterly performance. Following the release of its financial results, the company’s stock plummeted by more than seven percent in after-hours trading.
The shortfall stemmed from Google’s cloud division, which reported a 30 percent revenue increase to $11.95 billion but fell short of the anticipated $12.2 billion. Additionally, overall revenue rose by twelve percent to $96.47 billion but still did not meet market expectations.
Despite these setbacks, profits soared over 28 percent year-over-year to $26.54 billion, with Google’s advertising sector continuing to account for the bulk of Alphabet’s income, growing by 10.6 percent to $72.46 billion. YouTube contributed nearly $10.5 billion, marking a 14 percent increase from the previous year.
As the DAX index sees a midweek decline, investors are turning to safer assets like gold.
Election Advertising Boosts Google’s Revenue
Google attributes part of its revenue growth to increased advertising spending linked to the upcoming U.S. presidential election. On election day, 45 million users in the U.S. engaged with election-related videos on YouTube.
The trajectory of Google’s advertising business is under scrutiny, particularly regarding whether competitors’ strategies to provide direct answers via AI might undercut Google’s traditional search engine model.
As the election campaign kicks off, AI-generated content, including a realistic video of CDU leader Merz, has already begun circulating, raising questions about the implications of such technology.
Google’s Strategic AI Search Initiatives
In response to these challenges, Google is focusing on enhancing its search results with artificial intelligence while maintaining its core business model. Advertising in web search remains a pivotal component of the company’s revenue strategy.
Google is implementing AI-driven summaries of search results designed to provide direct answers to user queries. According to CEO Sundar Pichai, this feature is expected to increase user engagement with web searches.
Meanwhile, the tech industry is buzzing with the emergence of startups like DeepSeek, which are capturing attention for their innovative approaches.
Substantial Investments in AI Infrastructure
In 2023, Alphabet plans to invest approximately $75 billion in expanding its infrastructure, with a significant portion allocated for data centers supporting artificial intelligence initiatives.
However, the performance of Alphabet’s “other bets”—including projects like self-driving cars and delivery drones—has seen a decline, with quarterly revenues dropping from $657 million to $400 million year-over-year. The operating loss in this segment has increased from about $863 million to $1.17 billion.
This topic continues to evolve, reflecting the dynamic nature of the tech landscape and its implications for the future.