We’ve just closed the August/September issue of Fortune, and the cover story zeroes in on Alphabet, which is facing a classic innovator’s dilemma.

For the first time since the early 2000s, the search giant’s $160 billion core business is being challenged, thanks to generative A.I.

Fortune senior writer Jeremy Kahn dug into how CEO Sundar Pichai is preparing his troops to battle for the future of search. Here’s Jeremy on the situation, below:

The November debut of ChatGPT caught Google off guard, setting off a frantic six months in which it scrambled to match the generative A.I. offerings being rolled out by ChatGPT creator OpenAI and its partner and backer, Microsoft.

Satya Nadella, Microsoft’s CEO, famously quipped that he wanted to be known for having made Google “come out and dance.” Some doubted Alphabet could: The narrative was that the Google parent company had grown bloated and sclerotic. ChatGPT would be a “Google killer.”

Well, the past six months have shown that elements of that storyline were premature at best. At Google’s huge annual I/O developer conference in May, Pichai showcased Google’s generative A.I. prowess.

But Pichai made only the briefest mention of how generative A.I. might impact the company’s first and still foremost product, Search. Search is Alphabet’s primary engine, driving $160 billion in revenue last year—60% of Alphabet’s total.

If Pichai is tentative about the company’s plans for Search, it is because he has yet to demonstrate he has an answer for the fundamental challenge generative A.I. poses to Alphabet’s business: If A.I. chatbots can deliver information from across the internet, not as a list of links but in conversational prose, what happens to Google’s storied advertising-based profit machine?

That question is at the heart of Google’s innovator’s dilemma, as Pichai and his team race to figure out how to produce meaningful revenue from this paradigm-shifting technology. The outcome could scramble the ranks of America’s largest technology companies and help redefine how we all access information.

July 25, 2023

FEATURES

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HOUSING

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CRYPTO

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Sudhir Nair explained how clients’ portfolios will be “much more personalized, much more customized, much more holistic.”

Could Fabric’s computer chips revolutionize cryptography? The company just got a $50 million order for a product that doesn’t exist yet

Fabric’s CEO says the purchase order is “the starting gun for the entire zero-knowledge proof hardware industry.”

SUCCESS

Gen Z is embracing ‘lazy girl jobs’ in a rebuke of millennials’ ‘girlboss’ and ‘lean in’ manias

Working a job with set hours, solid benefits, and fully remote flexibility is Gen Z’s answer to hustle culture.

Workers are creating a ‘dead zone’ between 4–6 p.m. to fit in COVID-era habits like school runs and gym sessions

Despite mass mandates for workers to return to the old way of working, bosses aren’t having any luck keeping butts on seats until end of day.

PERSONAL FINANCE

In the ‘Succession’ era, wardrobes of the wealthy are subtler than ever. The rich identify each other with luxury that only a highly trained eye can detect

Expensive blank baseball caps and boring camel jackets are in vogue with the 1%.

LEADERSHIP

Rookie managers make nearly half of female employees want to quit

What’s more, this experience worsens with age: Women over 55 were the most likely to rate new managers as weak at “handling difficult situations” and “providing feedback.”

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