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There could be an opposite avenue: ad-free Google Premium subscription with AI chat as a crown jewel. An ultimate opportunity to diversify from ad revenue.


There's not enough money in it, as Google's scale.

Especially because the people who'd pay for Premium tend to be the most prized people from an advertiser perspective.

And most people won't pay, under any circumstances, but they will click on ads which make Google money.


The low operating margin of serving a GPT-4 scale model sounds like a compelling explanation for why Google stayed out of it.

But then why did Microsoft put its money behind it? Alphabet's revenue is around $300bn, and Microsoft's is around $210bn which is lower but it is the same order of magnitude.


YouTube does it, at Google scale. And these same people do pay $20/mo for ChatGPT anyway.


YouTube isn't comparable - YouTube revenue is roughly 30B/year, while Search revenue is roughly 175B/year.

Advertisers are willing to pay far more than $20/mo per user, combined with the fact that search costs way less per query than inference.




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