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Google backed up its vision for artificial intelligence (AI) "everywhere" at its annual I/O developer conference with boasts of millions and billions of users of its software, apps, and services. Although such reach would undoubtedly offer an advantage over Apple, Amazon, Facebook, and other rivals, Google faces fundamental challenges in three key areas: social, trust, and making advertising work in an AI-augmented world.

  • Social. If Google is a heavyweight in search and operating system software, then it's a lightweight in communications. According to an Ovum survey of 3,000 consumers in the UK, US, and Japan, Google+, Allo, Duo, and Hangouts are the most used social networking or messaging platforms for just 2% of smartphone and tablet users. This lack of success will become a growing problem for Google, because innovation in mobile chat, social video, and other forms of communication will become increasingly important for both connecting consumers with each other and connecting consumers to the companies that want to sell to them. Google's announcements at I/O appear to be hedges against the poor performance of Google+ et al. because they will see AI-aided communications integrated into the more popular Google applications, such as its Smart Reply system for Gmail and intelligent photo-sharing in Google Photos. These enhancements might increase the utility of these applications, but they seem unlikely to stop Facebook, Snapchat, Instagram, and other more radical and compelling forms of social media from diminishing the role of Google's apps in consumers' lives.

  • Trust. Google did not use I/O 2017 to address the most pressing issue facing YouTube, its most popular app after its search engine. Earlier this year, PepsiCo, Starbucks, and other major brands reportedly pulled spend from the video-sharing site due to concerns that their ads were appearing next to videos featuring racism, homophobia, and other offensive content. Granted, YouTube's challenges with user-generated content aren't as extensive as Facebook's and Twitter's are likely to become. But YouTube is the only platform to have taken such a direct and public hit to its revenues. In addition, Google's other properties are not immune to toxic content. Earlier this year, several journalists and bloggers found that Google's Home device and search engine would provide answers based on fake news in response to questions like "Is Obama planning a coup?" Google was quick to correct the errors, but Ovum believes that all internet platforms that rely on highly scaled and automated platforms are likely to encounter growing problems with disinformation and offensive content. Applying AI could be both a solution and a problem, as systems designed to learn from human behavior can end up reflecting human biases and prejudices.

  • Advertising. The greatest challenge Google faces is adapting its advertising models to fit the changing ways consumers are interacting with technology. Google Home recently told users that Disney's Beauty and the Beast was in movie theaters during its standard weather and travel update. The internet giant insists this wasn't an ad, but the public wasn't convinced, with protests leading Google to pull the listing. Whatever the case, it shows that Google's search-and-display advertising model won't translate easily to situations where consumers are relying more on voice interfaces and digital assistants than using screen-based devices to pull down information from the internet. The fundamental question is whether consumers will trust a digital assistant powered by Google to truly act in their interests, rather than those of its real paymasters, advertisers. Google makes almost all its money from selling audiences to advertisers, rather than selling direct to consumers. As the old saying about ad-funded services goes: "If you're not paying for it, you are the product."

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