In the race to commercialize AI, Google seems to have found the sweet spot for monetization. According toThe Information websiteThe report points out that the sales performance of Google's Gemini AI model has seen "skyrocketing" growth in the past year, reflecting not only a significant improvement in model quality but also a direct boost to the revenue growth of Google Cloud's core server business.
The model has become more powerful, and businesses are more willing to pay for it.
The report, citing three sources familiar with the matter, indicated that as the Gemini model continues to improve in terms of inference capabilities and stability, enterprise customers are increasingly willing to pay for the Gemini API or related services.
This contrasts sharply with the predicament Gemini faced when it was first launched in early 2024. At that time, market attention was largely focused on OpenAI's GPT-4, but after a year of iterations (including the launch of Gemini 1.5 Pro/Flash), Google has clearly convinced enterprise users of its performance and cost-effectiveness.
AI is the guide, cloud infrastructure is the main course.
More noteworthy is the "Halo Effect" of AI on Google's overall cloud business. Sources familiar with the matter revealed that when enterprise customers begin implementing Gemini for AI application development, they often also purchase more Google Cloud computing resources and storage services.
This means that AI has become the strongest "guide" for Google Cloud to seize market share. This trend of "buying AI and getting cloud services free" or "going to the cloud to run AI" is helping Google gain new growth momentum in its competition with AWS and Microsoft Azure.
Current Market Situation: Not Just a Battle of Models, But a Battle of Ecosystems
The enterprise AI market is currently fiercely competitive. According to a report by the US private venture capital firm Andreessen Horowitz (a16z), while ChatGPT still dominates the consumer market, Gemini is catching up at an astonishing pace in the enterprise sector. Google's advantage lies in its vast ecosystem integration, such as deeply embedding Gemini into services like Google Workspace (Gmail, Google Docs, Google Meet), allowing enterprise employees to use AI naturally in their daily work, thereby boosting overall paid subscriptions.
Analysis of viewpoints
Google's growth further validates the wishful thinking of cloud providers: "AI is not just a product, but also a catalyst for infrastructure."
In the past, enterprises might have hesitated to move to the cloud, but now, in order to adopt generative AI (GenAI), moving to the cloud has become a necessity. Google's clever move is that it no longer simply competes with OpenAI on "whose model is smarter" (although this is also important), but has returned to its most proficient strategy of "bundling cloud services".
When users become accustomed to using Gemini to write emails, create presentations, and even train their own customer service chatbots with Vertex AI, they essentially become reliant on Google Cloud's cloud services. For Google, this is a more sustainable and stable business than simply selling APIs.
Furthermore, with the emergence of highly efficient models like DeepSeek, although the cost of a single inference has decreased, according to the "Jevons paradox," demand will actually surge due to the lower cost, and ultimately, cloud providers like Google, which control the supply of computing power, will still be the ones to benefit.
Note:Jevons' paradox is an economic theory first described by British economist William Stanley Jevons in his 1865 book "The Coal Problem". It argues that when technological progress increases the efficiency of resource use (reducing the amount required for any kind of use), the decrease in cost leads to an increase in demand, which in turn causes the rate of resource consumption to increase rather than decrease.
