Google Bets Big on AI to Transform Search, Says Investment Chief

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Alphabet Inc., the parent company of Google, is channeling its largest investments into enhancing its core search business through artificial intelligence (AI), according to Ruth Porat, Alphabet’s president and chief investment officer. Speaking at the Reuters NEXT conference in New York, Porat underscored that applying AI to search remains the company’s most significant focus.

“We’re meeting people where they want to be next,” Porat stated during her interview with Reuters Editor-in-Chief Alessandra Galloni. Search advertising generates the majority of Alphabet’s annual revenue, which exceeds $300 billion.

In recent years, Alphabet has integrated AI-powered features into its search engine, such as AI-generated overviews for queries without straightforward answers. These efforts come in response to rising competition from companies like OpenAI, the creator of ChatGPT. However, this shift has presented challenges, including the phenomenon of AI “hallucinations,” where the technology produces inaccurate or fabricated information.

CLOUD AND HEALTHCARE: ADDITIONAL INVESTMENT AREAS

In addition to its AI-driven search initiatives, Alphabet is investing heavily in Google Cloud and healthcare technologies. Porat highlighted the company’s achievements in healthcare innovation, including AlphaFold, an AI system capable of predicting protein structures. Through its Isomorphic Labs division, Alphabet is leveraging AlphaFold for drug discovery.

Porat also emphasized the transformative potential of AI in medical care, from preserving eyesight for at-risk individuals to reducing administrative burdens on doctors. “It can restore humanity into the doctor-patient relationship,” she said, drawing on her own experiences as a two-time breast cancer survivor.

BALANCING INNOVATION AND COSTS

While Alphabet sees AI as a “generational opportunity,” the investments come with substantial costs. The company is projected to spend $50 billion in 2024 on chips, data centers, and other capital-intensive projects. Despite these expenses, Porat emphasized that Alphabet is committed to grounding its investments in measurable results. “We need to generate a return,” she stated.

As Alphabet pioneers advancements in both search and broader applications of AI, the company aims to maintain its dominance in search advertising while addressing competitive and operational challenges.

GM Exits Loss-Making Cruise Robotaxi Business Amid Restructuring Efforts

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General Motors (GM) has announced its decision to exit the development of robotaxi services at Cruise, its majority-owned autonomous driving unit, marking a significant pivot in the automaker’s strategic priorities. The Detroit-based company revealed on Tuesday that it will no longer fund Cruise’s robotaxi operations, citing the substantial time and financial investment required to scale the business in an increasingly competitive market.

Since 2016, GM has invested over $10 billion into Cruise, but the unit has yet to achieve profitability. Moving forward, Cruise will be integrated into GM’s driver-assistance technology group, signaling a shift away from fully autonomous vehicles. The decision follows GM’s broader strategy to focus on its more profitable lines of business, including gasoline-powered trucks and large vehicles, while scaling back on electric vehicle (EV) initiatives and restructuring its operations in China.

In 2023, GM CEO Mary Barra expressed optimism that Cruise could generate $50 billion in annual revenue by 2030. However, she described the unit as “expendable” on Tuesday, explaining that the high operational costs of running a robotaxi fleet did not align with GM’s core business. Barra emphasized the need for fiscal prudence, noting that the restructuring will cut annual spending on Cruise from $2 billion to $1 billion by June 2024.

While Barra did not specify how many Cruise employees might transition to other roles within GM, the decision reflects broader challenges in the autonomous vehicle (AV) industry.

COSTLY ROAD AHEAD FOR AUTONOMOUS VEHICLES

GM is not the first automaker to retreat from ambitious autonomous driving projects. In October 2022, Ford wound down its Argo AI unit, citing similar financial and technical hurdles. Although competitors like Tesla and Alphabet’s Waymo remain invested in AV technology, the market has proven to be both costly and complex.

Tesla CEO Elon Musk continues to champion the potential of robotaxis and expects regulatory support under President-elect Donald Trump’s administration to facilitate broader deployment. Meanwhile, Waymo is expanding its ride-hailing services in cities such as Los Angeles and Miami, bolstered by a $5.6 billion funding round led by Alphabet.

LEGAL AND OPERATIONAL HURDLES

Cruise’s recent legal challenges have further compounded GM’s decision to abandon its robotaxi ambitions. In October 2023, a Cruise vehicle in San Francisco struck and seriously injured a pedestrian. The company admitted to submitting a false report to federal regulators and agreed to pay a $500,000 fine as part of a deferred prosecution agreement. GM also faced significant financial penalties, including a settlement with the injured pedestrian, while U.S. safety regulators continued to scrutinize the company.

In July, GM shelved plans for a steering wheel- and pedal-free robotaxi, following layoffs of over 25% of Cruise employees and the dismissal of several top executives. GM also withdrew a petition to the National Highway Traffic Safety Administration (NHTSA) that sought approval to deploy up to 2,500 autonomous Origin vehicles annually without human controls.

SHIFTING FOCUS

As GM retreats from autonomous robotaxis, its focus appears to be realigning with its core business of producing conventional vehicles and advancing driver-assistance technologies. While the company once viewed Cruise as a cornerstone of its future mobility strategy, it now sees scaling such operations as a long-term endeavor that no longer aligns with its immediate priorities.

Despite the setbacks, GM shares rose 3.2% in extended trading on Tuesday, reflecting investor confidence in the automaker’s renewed focus on profitability.

Ukrainian-American Group Opposes SpaceX Starlink Expansion Over Musk’s Alleged Russia Ties

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SpaceX’s plan to expand its Starlink satellite network with 22,488 additional satellites is facing formal opposition from the Ukrainian Congress Committee of America (UCCA), which has raised concerns about Elon Musk’s connections to Russia and the use of Starlink technology by Russian forces. The UCCA filed a petition with the Federal Communications Commission (FCC) on Wednesday, requesting that the agency block the expansion.

The UCCA’s objections center around Musk’s alleged interactions with Russian President Vladimir Putin and the use of Starlink in military operations. Musk’s decision to prevent Ukraine from launching an attack on Russia’s Black Sea fleet in 2022, by disabling Starlink service over Crimea, has been a major point of contention. The UCCA’s President, Michael Sawkiw, Jr., expressed concern about the potential national security implications, stating that if Starlink is found to have aided Russia, it would be detrimental to Ukrainian-American interests and U.S. national security.

The UCCA also highlighted other issues, including Musk’s potential conflicts of interest arising from his new role with the incoming Trump administration’s Department of Government Efficiency (DOGE). This advisory body could influence regulations and government spending, including decisions related to SpaceX and its contracts. The UCCA argues that Musk’s involvement with DOGE poses a risk of bias and financial conflict, particularly with his companies receiving government contracts while benefiting from FCC actions.

In addition, the UCCA raised environmental concerns related to SpaceX’s rocket launches in Texas. The Boca Chica site, where SpaceX conducts many of its launches, is in a biologically sensitive area, home to endangered species. The group noted that past launches had led to the destruction of bird nests, exacerbating concerns about the environmental impact.

The petition requests that the FCC delay SpaceX’s expansion plans until an environmental review is conducted and any conflicts of interest surrounding Musk are resolved. This move follows earlier comments from the UCCA opposing SpaceX’s previous requests for additional spectrum for Starlink.

While the petition brings attention to Musk’s relationships and SpaceX’s practices, it is not the only controversy surrounding the company. Musk has previously denied claims that Starlink terminals were sold or used by Russian forces, though multiple reports have suggested otherwise. Additionally, Musk’s business dealings and statements continue to draw scrutiny, with calls for investigations into his ties with Russia.