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Comment by lukeschlather | Hacker News Reader

The bubble referenced in the article is $1 Trillion, compared to Google's $3 trillion market cap. And OpenAI / Anthropic legitimately compete with Google Search. I feel weirdly like AI's detractors are somehow drinking too much of the AI Kool-Aid. All AI has to do to justify these valuations is capture 1/3rd of Google. Unless Google is wildly overvalued, which it may be, but that's not a phenomenon that has anything to do with AI hype.

And there are legitimately applications beyond search, I don't know how big those markets are, but it doesn't seem that odd to suggest they might be larger than the search market.

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NVIDIA has a market capitalization of about US$4.3–4.6 trillion. Still not overly excessive compared to Google considering it's a hardware company.

Most of Google's value is the moat they've built around the things that bring in money... their advertising market, google play store, vertical integration, etc. See also Doctorow's Chokepoint Capitalism.

Building even a tiny fraction of those moats is mind-bogglingly difficult. Building a third of that moat is insanely hard. To claim that the AI industry's "expected endgame moat size" is one-third of Google's current moat is a ludicrous prediction. You'd be better off playing the lottery than making that bet.

I would be happy to bet against this if I could do it without making a Keynes-wager (that I can remain solvent longer than markets remain irrational), but I see no way to do so. Put options expire, futures can be force-liquidated by margin calls, and short sales have unlimited downside risk.

> All AI has to do to justify these valuations is capture 1/3rd of Google.

Is that all? It really is that easy huh.

> And OpenAI / Anthropic legitimately compete with Google Search

They compete legitimately with Google Search as I compete legitimately with Jay-Z over Beyonce :)

Just ask yourself this question though...

Is there a reason why AI cannot be far better than Google at providing results to queries?

Inherently, they are in the same business, but I am not very aware of any AI specifically aimed right at Google's business....... but it is completely logical that they would.

Furthermore, it appears that Google just sells off placement to the highest bidder, and these AIs could easily beat that by giving free AI access in exchange for nibbling at the queries and adding a tab of 'sponsored results'

> Is there a reason why AI cannot be far better than Google at providing results to queries?

There isn't just like there isn't any reason why Bing or Duck could have overtaken Google all these years.

> but it is completely logical that they would.

Logical yes, there are a lot of things that are logical, actually making something logical practical is whole other thing...

> it appears that Google just sells off placement to the highest bidder

They have been doing this for years while their search and other business has been growing and growing...

> these AIs could easily beat that by giving free AI access in exchange for nibbling at the queries and adding a tab of 'sponsored results'

agree 100% on everything here except easily part :)

Yeah it's like you have all these people staring at a little baby saying "theoretically, based on this baby's DNA, it could become the greatest basketball player of all time, if it trains for 4 hours a day everyday for the next 20 years, and suffers no injuries"

Meanwhile you have Lebron who is already the highest scoring player of all time, and he's still going out every night and putting up another 20 points.

Comparing potential to actual at 1:1 ratio is insane.

> Is there a reason why AI cannot be far better than Google at providing results to queries?

No, but there is a reason to suspect that other AI has a big challenge there, and that is that Google is a trillion dollar company who is a leader in both search and AI and whose investment in AI has always been significantly about both improving its ability to respond to queries and avoiding needing queries in favor of proactively supplying information.

And also that the most productive means of using AI to respond to queries about material facts continues to rely on something search-like supporting an LLM for grounding.

> Furthermore, it appears that Google just sells off placement to the highest bidder, and these AIs could easily beat that by giving free AI access in exchange for nibbling at the queries and adding a tab of 'sponsored results'

Google already provides free AI access, uses it by default to respond to most queries, and puts it above the sponsored results, with a link to go into a more focussed AI interface for further exploration.

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