Alphabet Inc. Presents at Morgan Stanley’s Technology, Media & Telecom Conference 2024, Mar-06-2024 02:05 PM - NasdaqGS:GOOGL

NasdaqGS:GOOGL

Philipp Schindler, the Senior Vice President and Chief Business Officer at Alphabet, discussed various topics during his presentation at Morgan Stanley’s Technology, Media & Telecom Conference 2024. Here is a detailed summary of his comments:

Priorities for 2024

• Focus: Maximizing customer and partner success, driving growth, and creating sustainable financial value.
• Role: Oversees monetization, services (technical and consumer), partnerships, and country operations.

Addressing Bias and Errors in AI Models

• Response to Bias: Acknowledged the issue, committed to fixing it, and highlighted ongoing progress.
• Postmortem Analysis: Conducting a thorough review to understand the nuances of the issue and implementing changes, including structural adjustments and improvements to product launch processes.
• Future Innovation: Remains optimistic about the potential of AI and believes the best is yet to come.

Alphabet's Approach to Generative AI (GenAI)

• Slow Launch of Chatbots: Made a conscious decision not to rush the launch due to the company's size and scale.
• Recent Innovations: Highlighted advancements such as the Gemini family of models, upgrades to Bard (now Gemini), lightweight open-source Gemma models, and the Gemini 1.5 Pro model with a long context window.
• Search Experiments (SG&E): Running experiments to ensure the product is helpful, trustworthy, and maintains high quality standards.

Changes to the Search Product

• Concerns About Search: Takes concerns seriously and continuously monitors and adapts to user needs.
• Enhancements with AI: Believes AI can dramatically enhance the core aspects of Search, including information retrieval, factuality, and web diversity.
• User Feedback: Positive feedback on SG&E for complex queries and deeper insights.
• Platform Shifts: Confident in managing platform shifts based on past experiences.

User Behavior in Search

• Positive Growth: Observed positive search query growth in major markets over the past 12 months.
• Freshness: Noted that approximately 15% of daily queries are new, highlighting the challenge and success in maintaining freshness.
• Innovation Examples: Mentioned Bard, MUM models, Lens, and the ability to question Lens, among others.

Rollout of Search Experiments (SG&E)

• Testing Ground: Labs is an excellent testing environment for new features and functionalities.
• Expansion: Plans to scale labs further to gather more user feedback and insights before broader rollout.

Monetization of Search

• Opportunities: Sees potential for additional advertising opportunities with UX changes, similar to the desktop-to-mobile transition.
• Integration: Experiments with simple integrations above or below SG&E, observing positive user feedback.
• Future Vision: Envisions GenAI-based ads integrated natively into GenAI answers, creating significant consumer and advertiser value.

Impact of AI on Ad Business

• Current Usage: AI has been used in core ad systems for a decade, with increasing adoption by advertisers.
• Advancements: Using Gemini models in PMax for keyword targeting, improving conversational experiences, and enhancing video solutions.
• Creative Optimization: Excited about the potential for creative revolution with GenAI, including video generation and physical world use cases.

YouTube Opportunities

• Significant Opportunity: Emphasized the significant opportunity for generative AI on YouTube, particularly in advertising and creator-focused tools.
• Creator-Centric: Focuses on making creators successful with tools like Dream Screen and Dream Track.
• Advertising Component: Sees a big part in advertising and creative optimization.

Constraints for Video Creation

• Key Factors: Precision level, trust and safety, ease of use, and efficiency are critical considerations for expanding video creation tools.

Google Cloud and GenAI

• Exciting Opportunity: Described the cloud opportunity as exciting, with significant interest from CEOs and CXOs.
• Monetization Strategy: Three main areas—highly optimized AI infrastructure, the Vertex AI platform, and smart assistance applications.
• Adoption in 2024: Observes significant traction across all three areas, driven by a solution-centric approach from enterprises.

YouTube Shorts

• Progress: Happy with the progress on Shorts watch time and monetization.
• Usage Metrics: 2 billion logged-in viewers monthly and 70 billion daily views.

Subscription Revenue

• Offerings: Highlighted the success of Google One with over 100 million users.
• Gemini Advanced: Launched a new subscription offering at $19.99 per month, receiving positive user feedback.

Reengineering the OpEx Base

• Efficiency Measures: Actively reengineering the cost base, increasing velocity, and optimizing investments.
• Investment Bucket: Using AI to optimize portfolio management, sales coaching, customer service interactions, and real-time translation.
• Optimization and Deprioritization: Employing statistical models to analyze sales force structure, shifting some customers to more scalable sales teams, and streamlining organizational structures.

Sales Force Efficiency

• Potential Impact: Acknowledges that technologies like PMax could further drive sales force productivity and efficiency in the future.