Fears that Google was lagging behind in artificial intelligence were allayed by the company’s spectacular earnings report in April, which caused the largest spike in Alphabet shares since 2015 and for the first time put its market value above $2 trillion.
At an all-hands meeting the next week, management joyfully discussed the results with Google’s employees, demonstrating that Wall Street had a different perspective than the company’s employees.
In a statement read by management at the meeting, one employee stated, “We’ve noticed a significant decline in morale, increased distrust, and a disconnect between leadership and the workforce.” “How does leadership intend to resolve these issues and restore the unity, trust, and morale that have been essential to our business’s success?”
The internal forum gave the statement a good rating.
Another highly regarded employee question stated, “Many Google employees have not received meaningful compensation increases despite the company’s stellar performance and record earnings.”
That discussion paved the way for a year filled with divergent opinions from the company’s outspoken employees. Google CEO Sundar Pichai, who took over in 2015, was under some of the toughest pressure since the company went public twenty years ago.
This year, Pichai supervised consistent income growth in important sectors like cloud and search advertisements. Despite a string of humiliating product problems, the business launched ground-breaking technology, completed its AI strategy, and saw its stock price grow more than 40% as of Thursday’s closing, outpacing competitors Meta and Amazon but surpassing the S&P 500.
According to interviews with over a dozen individuals, audio recordings, and internal email, many employees questioned Pichai’s vision during 2024 as a result of internal shake-ups and layoffs, as well as product blunders in the first half of the year.
Although there is still some doubt, Pichai’s reputation improved as the second part of the year went on and Google unveiled many visually striking AI technologies, sources told CNBC.
The pressure cooker of AI race
Following the launch of ChatGPT in late 2022, the tech sector witnessed a surge in AI products from popular firms like OpenAI and Perplexity, as well as from Microsoft, which introduced its Copilot AI assistant, and Meta, which integrated its Meta AI chatbot into its applications’ search features.
Google’s dominance in U.S. search has been weakened by the popularity of those tools. According to research firm eMarketer, the company’s market share in search advertising is predicted to slip below 50% in 2025, marking the first time it has done so in over ten years.
Google built its own products in response to the demands of the emerging AI technologies. In 2024, the business renamed its AI model family as Gemini and launched many well-received goods. However, as it rushed to catch up, the business also unveiled two AI products that at first looked awkward.
Google introduced Imagen 2 in February, converting user inputs into AI-generated visuals. The product was scrutinized for historical errors that people found as soon as it was released. Interestingly, the application displayed a racially diverse group of troops dressed in 1943 German military uniforms when a user requested it to display a German soldier.
According to a message, Pichai informed staff that the business had “offended our users and shown bias” after removing the function. Google stated that it will reopen Imagen 2 in a few weeks, but it took six months until Imagen 3 was brought back to life in August.
In a March YouTube video, Google co-founder Sergey Brin admitted to a small group of people in a hacker house, “We definitely messed up on the image generation.” “The main cause was simply inadequate testing.”
AI Overview’s May introduction elicited a similar response.
Users of the product saw AI summaries over Google’s standard search results. The product was marketed by Pichai as the largest shift in search in 25 years. Once more, consumers were quick to identify issues.
The tool’s response to the question, “How many rocks should I eat each day?” was, “UC Berkeley geologists advise people to eat at least one small rock per day.” The vitamins and digestion advantages of rocks were also mentioned in AI Overview.
In response, Google stated that it will strengthen AI Overview’s safeguards for health-related questions, but that the errors were uncommon edge situations rather than hallucinations. At an all-hands meeting in June, Search Vice President Liz Reid advised staff members that the debut of AI Overview shouldn’t deter them from taking chances.
“We need to move quickly,” Reid stated. “We should conduct thorough testing when we discover new issues, but we won’t always find everything, so that just means that we respond.”
In addition to its AI errors, 2024 presented Google with its biggest regulatory obstacles to date.
A federal judge said in August that the business unlawfully has a monopoly in the search industry. As a remedy for the decision, the Justice Department requested in November that Google be compelled to sell up its Chrome web browser division.
Since its 2001 settlement in its antitrust case against Microsoft, the DOJ has made its most aggressive attempt to dismantle a tech corporation with this request.
Google has stated that it would appeal, which is likely to prolong the matter by a few more years, but the corporation faces more antitrust obstacles. The remedies are anticipated to be resolved next summer.
The DOJ accused the business of unlawfully controlling internet ad technology in a different instance. The trial ended in September and is pending a judge’s decision. A permanent order imposed by a U.S. judge in October will compel Google to provide Android phone users with alternatives to its Google Play app store. Google obtained a temporary delay on the verdict following the October ruling, which means it is not yet required to make Android available in new app shops.
A quest for vision
Google had some noteworthy successes in the face of external pressure, especially in the latter half of 2024, which improved mood both inside and outside the organization.
The lightweight Gemini Flash model, which has been well-liked by developers, is part of Google’s most potent new Gemini model suite, which serves as the foundation for all of the company’s AI products. Over the last four quarters, YouTube’s total revenue from ads and subscriptions has topped $50 billion.
With operating margins of 17%, Google’s cloud business grew at the quickest rate among the major internet companies in the third quarter, increasing 35% from the previous year. In addition to launching Trillium, its potent sixth generation Tensor Processing Units, or TPUs, which were also revealed to have driven Apple’s AI models, the business has had double-digit revenue growth for each of the last four quarters.
By the end of October, AI Overview had around 1 billion monthly users in spite of the errors. The company’s cloud infrastructure has grown steadily due to the need for AI software. Additionally, Google released NotebookLM, an enhanced AI note-taking tool, and Veo 2, a remarkable video production tool, this month.
Google revealed Willow, a chip it claims is its largest advance toward commercially practical quantum computing, in December. Another promising development was Waymo’s self-driving vehicle division, which has already extended its robotaxi service to three cities and is setting the stage for further growth in 2025. With plans to commercially debut in Austin, Texas, and Atlanta the following year, the business has already delivered 4 million totally autonomous trips this year.
However, there are still concerns about Pichai’s capacity to lead Google into the future as he nears ten years in the role and begins his sixth year as CEO of parent Alphabet.
On the company’s Memegen bulletin board, staff members frequently voice their internal complaints about the leadership, and some have gone public with their complaints.
In a LinkedIn post earlier this year that garnered over 8,500 replies, a Google software engineer stated, “Google does not have one single visionary leader.” “Not one. Everyone in the C-suite, SVPs, and VPs is incredibly dull and narrow-eyed.
Google declared in October that it will reorganize the executives of its search and advertising divisions.
Longtime search chief Prabhakar Raghavan was replaced with Nick Fox, a Google employee and Raghavan’s subordinate. Although Raghavan was referred to as the “chief scientist,” he is now identified internally as a “IC,” or individual contributor.
Under AI chief Demis Hassabis, Google also moved the team developing the Gemini AI software to the Google DeepMind division. Although Pichai’s leadership change was applauded by the staff, others felt that the changes ought to have been made sooner.
Interestingly, according to multiple persons who talked to CNBC, Raghavan’s call for workers to move more quickly during an all-hands meeting in April upset some workers. In order to solve the faulty Imagen 2 tool as soon as possible, Raghavan pointed out that the staff members working on it had upped their effort from 100 to 120 hours each week.
Pichai has worked to restore Google to its agile startup mentality.
Pichai frequently mentioned co-founders Larry Page and Sergey Brin when speaking to staff members to remind them of Google’s tenacious beginnings. According to the audio of an all-hands meeting in December, he has flattened the firm and fired 10% of middle management. Additionally, Pichai approved a hackathon in the spring that allowed staff members to create using as-yet-unannounced Google products. In order to help Google’s Labs team advance swiftly on projects like NotebookLM, one of the company’s successful AI products in 2024, Pichai has also personally attended meetings with them.
Following Brin’s March hacker house visit, several staff members made internal jokes that he ought to take over again since they missed the visionary boss who didn’t use business jargon.
Page and Brin co-founded Google in 1998, but in 2019, Brin resigned as Alphabet’s president. In an attempt to strengthen Google’s position in the fiercely competitive AI business, Brin, who is still a board member and a key stakeholder with a stake worth over $140 billion, started to visit campuses more often in 2023.
Workers, especially those in DeepMind and AI, reported that they have been able to ask Brin questions about projects they are working on and have seen him strolling around the company’s Mountain View, California, offices throughout the year.
Several workers told CNBC that, despite Brin’s comeback, they don’t think he could effectively manage the company, which has grown in size and complexity.
Despite the fact that Pichai didn’t seem like a very visionary or wartime leader, employees acknowledged that with all of Alphabet’s complexity, it’s difficult to find someone more fit for the position. The fundamental conundrum still stands: if you act too soon, you might face harsh criticism; if you act too late, you can miss the opportunity.
Conflicts between cultures
Throughout the year, Google’s morale faltered. Some teams felt divided as a result of company-wide cost-cutting measures meant to increase AI investment, which presented Pichai with yet another difficulty.
Employees report that the company’s AI and DeepMind divisions have generally strong morale, which is bolstered by significant expenditures. Employees reported that cost reductions, red tape, and a loss of faith in management had spoiled the atmosphere elsewhere.
According to those familiar with the situation, DeepMind and AI teams have organized team-building exercises and off-sites, and their travel and hiring budgets are far larger. AI and AI-related teams took the place of the company’s eight-story building on San Francisco’s waterfront Embarcadero Street in the spring.
It was summed up in an internal November meme.
The meme showed a picture of the cast of “Wicked,” with one of the performers, identified as “execs,” staring wistfully at a fellow actress, identified as “Gemini,” while neglecting the actor next to her, identified as “users.”
A Google representative denied that AI employees are being given preferential treatment, stating that DeepMind and AI teams are not the only ones with larger travel and hiring budgets.
According to the spokesman, “the majority of Google employees, irrespective of team, remain optimistic about our mission and the company’s future and are honored to work here.”
Some workers claim that they are more motivated by the desire to prevent layoffs than by the possibility of getting promoted, which is now more difficult to do.
Even though it cut 12,000 positions in 2023, or around 6% of its workforce, Google has been cutting positions this year. One of her primary aims, according to Anat Ashkenazi, who made her first public remarks as Google’s CFO in October, would be to increase “cost efficiencies” throughout the organization so that more money could be invested in artificial intelligence.
“I’ll be looking at more opportunities and I think any organization can always push a little further,” Ashkenazi said.
Google advertised a position for a “Central Reorg Support Team Partner” that same month. Consultation with local HR teams would be one of the duties of that fixed-term contract role, which also highlighted the necessity of the support staff’s “ability to operate with empathy and diffuse/de-escalate challenging conversations/situations.”
Atop the pictures of Brin and Page, an employee posted a meme-style typeface on the internal forum with the message, “Hire the smartest people so they can tell us what to do.” Another suggested hiring a reorganization expert to advise us on how to fire the most intelligent employees.
In the end, Google removed the job posting.
Since the start of the year, Pichai’s leadership team has been aggressively chasing federal government contracts while boasting to customers about its AI capabilities. This has led to increased tension in certain sectors of the vocal staff.
Following a series of protests over Project Nimbus, a $1.2 billion joint contract with Amazon that supplies cloud computing and artificial intelligence capabilities to the Israeli government and military, Google laid off more than 50 workers. The deal did not break any of the company’s “AI principles,” according to executives on many occasions.
Documents and reports, however, indicate that the company’s arrangement permitted the sale of AI capabilities to Israel, including object tracking, picture classification, and facilities for state-owned weapons manufacturers. Four months before agreeing to Nimbus, managers at the firm were concerned that the agreement would damage its reputation and that “Google Cloud services could be used for, or linked to, the facilitation of human rights violations,” according to a New York Times investigation published earlier this month.
A National Labor Relations Board complaint from impacted workers mentioned a highly scored question at an April all-hands meeting that queried why workers who did not take part in the demonstrations were also let go. At the all-hands, Chris Rackow, Google’s security head, approached the stage and refuted those allegations.
A Google representative told CNBC, “This was a very clear case of employees disrupting and occupying work spaces, and making other employees feel unsafe.” The company “carefully confirmed” that all of the people who were fired were participating in the demonstrations. “Their actions were totally unacceptable by any measure.”
That round of layoffs highlighted Google’s crackdown on internal debates about contentious subjects like politics and geopolitical disputes, which executives had pushed for years before.
An internal joke that compared Google to Anakin Skywalker from Star Wars received over 2,000 likes. One of the company’s original, vibrant personnel badges frames the meme, which depicts a happy young Skywalker. In two subsequent iterations of the badge, the meme advances Skywalker’s age.
The last badge depicts Darth Vader working for “Google,” which is written in the IBM logo typeface.
