This week, the Internet giant Google turned 25 years old. In the human world, 25 is still a vibrant and thirsty young person; but in the field of the Internet, although Google, at the age of 25, has grown into a behemoth, it faces obvious midlife crisis and future challenges.

Born on the Stanford Campus

It is not an exaggeration to say that Google is a banner of the global Internet. In the past 25 years, this search giant has continuously changed the industry landscape of the global Internet, mobile Internet, and artificial intelligence. It has had a profound impact on company governance, equity structure, corporate culture, and management style in Silicon Valley and even the world of startups and Internet companies.

The first Google doodle

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On September 4, 1998, Google officially registered and established the company. However, the Google website had already gone online a year earlier. Starting from 2002, Google employees celebrate the company’s birthday every year through doodles on the Google homepage. Due to the interests of the two founders, the first Google doodle was created a week earlier than the establishment of the company, reflecting their excitement after attending the Burning Man festival.

Google is a banner of Silicon Valley in the Internet age. Just like HP in the electrical age, Intel in the semiconductor age, and Apple in the PC age, the founding of Google has become a legendary story in Silicon Valley and a landmark event in the prosperity of the Internet age.

Like the pre-search era Internet giant Yahoo, Google also originated from the campus of Stanford University. The two founders, Larry Page and Sergey Brin, were both doctoral students at Stanford. They met in 1995, and the following year, Page proposed a new algorithm for tracking and ranking websites in his doctoral thesis, which is the source of Google’s search algorithm.

At that time, search engines ranked results based on the frequency of keywords appearing on web pages, while Page and Brin developed a more accurate search engine by evaluating the relevance of web pages through examining backlinks. Initially, they called this search engine BackRub, but later decided to name it Googol (a mathematical term, meaning 10 to the power of 100), but it was mistakenly spelled as Google. Thus, the name Google was born.

In fact, both Google and Baidu, the two search giants, have many connections since their inception. Larry Page’s algorithm was influenced by Li Yanhong’s RankRex algorithm developed in 1996. Later, their algorithm patent application also mentioned Li Yanhong’s RankDex algorithm patent. However, at that time, Li Yanhong was still working as a software engineer in a US company. It was more than a year after Page and Brin founded Google that Li Yanhong returned to China in 2000 to start Baidu search.

The Garage Entrepreneurial Legend Continues

In September 1997, Larry Page and Sergey Brin, the two founders, registered the domain name google.com and started their financing and entrepreneurship journey. Their first angel investment came from Andy Bechtolsheim, the co-founder of Sun Microsystems, who invested $100,000. Bechtolsheim wrote a check after just a brief product demonstration.

This angel investment has made him a billionaire, with wealth far exceeding that of founding Sun Microsystems. Bechtolsheim left Sun Microsystems as early as 1995 to start new ventures and investments, while Sun Microsystems was acquired by Oracle, and its large office park was sold to Meta.

Among Google’s initial investors was also Amazon founder Jeff Bezos. At the time, Amazon, which had just gone public, acquired a startup called Junglee, and the CEO of Junglee, Ram Shriram, introduced Bezos to the Google project. Both of them subsequently invested hundreds of thousands of dollars in Google. Amazon is still investing billions of dollars each year to purchase Google product search ads.

Like many legendary Silicon Valley startups, Google’s journey to success also began in a garage. After successfully raising $1 million in angel investments, Page and Brin officially registered Google Inc. in September 1998 and rented a large garage in Menlo Park, Silicon Valley from a friend for $1,700 per month to begin operations.

The owner of this garage was Susan Wojcicki, an employee of Intel’s marketing department. She soon joined the Google team and later took on long-term responsibilities for Google Ads and YouTube until early this year when she retired. Because of the garage startup, Susan’s sister also married Brin, and they maintained their marriage for eight years.

At the time, Page and Brin were still Stanford students and did not own their own garage. Both HP and Apple were founded in their founders’ own garages, saving them even the cost of rent. Due to rapid business growth, Google quickly moved out of Wojcicki’s garage and rented an office from an Iranian billionaire, who also made a small investment. This Iranian billionaire later switched from commercial real estate to business incubation and founded Plug & Play in Silicon Valley.

A Revolutionary Internet Company

Google is a revolutionary company, not only because they have changed the entire internet search experience, but also because they have had a profound impact on Silicon Valley and global internet companies. Whether it is management structure, company culture, or IPO choices, Google has pioneered in the Silicon Valley internet industry.

Less than a year after its establishment, Google raised $25 million in financing from well-known venture capital firms such as KPCB and Sequoia Capital. This is also the most successful investment in the history of the two venture capital giants. Under the advice of the two venture capital giants, Page and Brin agreed to bring in an experienced IT industry professional to help them manage Google.

In early 2001, former Novell CEO Eric Schmidt joined Google and successively served as chairman, president, and CEO until ten years later when he handed over the CEO position to Brin. Bringing in outside senior executives to mentor founders subsequently became a model for many Internet startups in Silicon Valley.

In 2004, Google went public on the NASDAQ market, but it chose the “Dutch auction” method of bidding, which subverted the traditional investment bank allocation game rules on Wall Street. This method avoided institutional investors from short-term speculation and profiting from stock prices, allowing Google stocks to be sold to retail investors as much as possible. This listing model was later imitated by well-known startups such as Spotify.

In addition, Google also introduced a dual-class structure with Class B shares enjoying ten times the voting rights. As a result, the two founders firmly control the company’s operational dominance, avoiding power struggles caused by equity dispersion after going public. This structure later became a template for many Internet companies such as Facebook, Alibaba, and JD.com.

Google also brought disruptive corporate culture to Silicon Valley Internet companies: open and transparent corporate governance, allowing employees to express their opinions on company products and operations; flexible working hours that allow employees to decide their own working hours, with 20% of free work time reserved; comprehensive employee benefits, covering almost all aspects of employees’ lives from free meals to laundry and haircut services to child care.

Although these systems and benefits have undergone significant adjustments or reductions in the past few years as Google’s revenue growth has slowed and it has gradually entered middle age, such work culture was unheard of in Silicon Valley twenty years ago, and it has become a template for the corporate culture of Silicon Valley Internet companies, leading to many imitations by later companies such as Meta and Twitter.

From Search to Mobile to AI

In the past 25 years, Google’s business has expanded continuously, from its initial web search to a full range of online services such as email, video, browser, maps, music, office, instant messaging, and cloud computing. It has become the dominant provider of Internet services in most global markets.

In July 2005, without Schmidt’s knowledge, Google’s two founders made a decision to invest $50 million to acquire Android, entering the mobile operating system market. In 2007, Google collaborated with hardware companies such as HTC, Motorola, and Samsung, operators such as Sprint and T-Mobile, and chip companies such as Qualcomm and Texas Instruments to launch the Open Handset Alliance, laying the foundation for the Android camp.

In September 2008, HTC released the first Android smartphone, which came with a complete set of Google services. Although this phone looked somewhat peculiar at the time, it ushered in the glorious era of Android. Just two years later, Android quickly surpassed operating systems of the pre-smartphone era such as Symbian, BlackBerry, and Windows Phone, becoming the number one platform in the mobile internet.

In the past 15 years, the Android operating system has developed from version 1.0 to 14.0. Almost all phone and tablet hardware manufacturers, except Apple, use different interfaces of the Android operating system. Android and iOS have almost dominated the entire mobile platform field.

With the tremendous success of Android, Google’s business dominance expanded smoothly from desktop to mobile. It not only firmly holds over 90% market share in the search market, but also has over 70% market share in the global mobile operating system market. In most markets, Google’s internet services are the preferred choice for users whether they access the internet from computers, tablets, or mobile phones.

In the past decade, Google has also led the trends in the autonomous driving and artificial intelligence industries. In 2009, Google launched its self-driving car project and was granted permission to test on the roads in California in 2011. It was under the guidance of Google’s self-driving cars that the technology trend of autonomous driving emerged, with many tech giants and startups subsequently investing in research, testing, and exploration in this field.

Google’s self-driving car project, Waymo, started independent operations in 2016 and began its first round of external financing in 2020, reaching a valuation of $30 billion. Google is also the pioneer of the commercial model for autonomous driving taxis. In 2017, it launched a self-driving taxi service with safety drivers in Phoenix, and in 2022, it removed the safety drivers. Just last month, the California government officially approved Waymo and Cruise, two companies, to fully operate self-driving taxis in San Francisco, marking an important milestone in the development of Level 4 autonomous driving industry.

Although the prospects for the implementation of Level 4 autonomous driving technology still remain uncertain, and the commercial model for autonomous driving taxis still faces many challenges, it is indisputable that Waymo has always been the leading company in this field, firmly holding the technological advantage.

As Google has become the internet giant with absolute dominance, its two founders, Larry Page and Sergey Brin, have stepped back from daily operations and established the holding company Alphabet in 2015, handing over core businesses such as Google to Sundar Pichai. In 2019, the two founders fully retired, and Pichai took over as the CEO of Alphabet.

Middle-age Crisis Becoming Increasingly Apparent

Although it has just turned 25, Google has entered middle-age. More precisely, in the second half of 2022, when Google turned 24, it suddenly faced an unprecedented middle-age crisis: not only did its business growth significantly slow down, leading to its first-ever layoffs and contraction, but it also encountered unprecedented challenges in its core technological field, forcing it to catch up with market leaders.

Despite the continuous expansion of Google’s business map, advertising remains their main source of revenue. In the first quarter of this year, advertising accounted for 78.2% of Google’s total revenue of $69.8 billion, including various types of ads such as search, platforms, and YouTube. This also means that Google’s revenue will be influenced by the overall trend of the global online advertising market and the macroeconomic situation.

The fourth quarter of the 2022 fiscal year is currently the peak of Google’s financial report, with a revenue growth of 10% to reach $76 billion. However, as the Federal Reserve continues to raise interest rates significantly and the US economy is overshadowed by the prospect of a recession, advertisers are cutting their budgets, and Google’s revenue growth has begun to slow down.

In the second half of last year, Silicon Valley experienced its first large-scale layoffs since the 2008 economic crisis. Except for a few companies like Apple, most technology companies, whether they are giants or startups, have been shrinking their businesses and conducting massive layoffs. Even Meta and Google, internet giants known for their generous salaries and benefits, were forced to conduct their first layoffs in company history. From November last year to March this year, Meta has cut more than 21,000 employees through two rounds of layoffs; in January this year, Google announced a layoff of 12,000 people, accounting for 6% of its workforce.

In addition to conducting layoffs, Google has also undergone significant corporate culture adjustments in the past few years. Due to strong employee opposition, Google was forced to cancel its cloud service contract with the US military in 2018. However, after that, Google quietly removed the “Don’t be evil” corporate value and quietly returned to a value that prioritizes business interests like ordinary companies.

With Google shrinking its business and conducting massive layoffs, employees’ influence over the company has significantly decreased. Google employees’ protests and opposition no longer have the power to influence Google’s operational decisions, and Google is also advancing its cloud service projects with the US military and the Israeli military. In addition to cutting employee benefits and controlling operating costs, Google has also abolished the 20% free time work policy.

The moment that made Google feel the midlife crisis the most was the release of ChatGPT by OpenAI at the end of last year. Over the past decade, Google has been investing heavily in the field of artificial intelligence and has been leading the industry in areas such as image recognition, natural language understanding, and AI engines and infrastructure, often causing industry shocks. In 2017, DeepMind defeated the strongest human Go player, Ke Jie, marking the complete conquest of the complex Go field by AI.

However, Google, who has always believed that it has a leading advantage in the field of artificial intelligence, was caught off guard by the startup company OpenAI in the newly popular generative AI field. After the release of ChatGPT in November last year, Google’s internal team felt a huge shock, and even issued a red alert.

In comparison to the AI shock brought by ChatGPT, Google’s generative AI product Bard always seems to be one step behind in research and clearly not intelligent enough. Microsoft, its old rival, spared no expense in investing in OpenAI, binding this strongest competitor to its own platform, and integrating ChatGPT into many Microsoft products such as Bing, ambitiously challenging Google.

Artificial Intelligence as the Biggest Challenge

Generative AI has become the key technology determining Google’s future core competitiveness. In February of this year, during the product demonstration of Bard, Google made factual errors, causing disappointment among investors and resulting in a market value loss of over 100 billion US dollars. The tremendous pressure from the market has forced Google to fully focus on generative AI and make it a top priority. Even co-founder Brin, who had been retired for many years, has started returning to the headquarters campus frequently to supervise the progress of Google’s generative AI projects.

Google’s unprecedented threat

At this year’s Google I/O conference, Google CEO Sundar Pichai went straight to the theme of introducing AI project progress and new products from the first minute. In the two-hour keynote speech, Google released 15 AI-related products consecutively and mentioned AI a total of 140 times, while the former absolute protagonist Android almost completely faded out of the keynote speech until nearly one and a half hours later when it was briefly mentioned.

When Google was first created, the two founders talked about Google’s mission as “organizing the world’s information and making it universally accessible”, and at that time, Google’s core business was providing information services through web search. By 2004, as Google was comprehensively developing various internet services, its vision escalated to “develop services that significantly improve the quality of life for as many people as possible”.

And today, 25 years after its creation, in a blog post celebrating Google’s 25th anniversary, Pichai’s future outlook chapter is almost entirely centered around AI. In the blog post, he stated that AI will be “the most significant technology transformation of our generation, which will be even larger than the transition from desktop computing to mobile computing, and even more significant than the internet itself”.

Pichai envisions, “AI will completely rewrite technology and bring unimaginable advancements to creativity for humans. Deploying AI responsibly to help everyone will become the most important way for Google to fulfill its mission in the next decade”.

In 25 years, Google has evolved from an energetic pioneer in web search in Silicon Valley to a giant internet company with almost all web services, spanning desktop and mobile platforms, with products covering individuals and enterprises, and a market value exceeding 1.7 trillion US dollars.

But at the same time, Google inevitably faces a midlife crisis: business growth is gradually slowing down, corporate culture is fading, and it is experiencing the ailment of slow decision-making in large corporations. Furthermore, in the race that determines its future fate, the generative AI track, Google is facing unprecedented technological challenges.

After the release of Bard in February this year, Google is currently actively preparing to release the next generation AI model, Gemini. This is Google’s most powerful AI model that combines the functionalities of GPT-4, Midjourney, and Stable Diffusion, leveraging all its core research and development capabilities. It will become Google’s most powerful weapon in the AI arms race with OpenAI and Microsoft.

Can AI resolve Google’s midlife crisis?

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