Google CEO shares challenges from inflation, freedom of expression on the internet

Google CEO Sundar Pichai says that, while consumers are putting the Covid-19 pandemic in their rearview mirror, the economy is clearly a growing concern for the company and the broader market. .

“We definitely see uncertainty ahead, like other brands,” Pichai told CNBC’s Deirdre Bosa in a May 12 interview at the company’s annual I/O conference. Google in Mountain View, California. “The good thing is that we’ve been running as a sustainable company for a long time. We’ve worked in moments like this in the past, be it 2008 or even the early days of a pandemic. , and we have a long-term vision”.

He also said the economy would “take time to get over” the current high inflation rate. “What causes uncertainty is that there are a lot of different factors, be it supply chain issues or rising energy prices,” Pichai said.

“I really think people are seeing fatigue in certain areas,” he suggests, using only tourism as an example. “But then you have other new areas that are showing problems, maybe because of supply chain constraints. Energy is a problem, for example. In some cases, rents have gone up. and food prices also increased.

Shares of Alphabet, the parent company of Google, are down about 22% this year. Meanwhile, Alphabet’s earnings at the end of April fell short of analysts’ expectations, largely due to a massive setback at YouTube, which has been hit by other digital advertising firms. in the first quarter. Executives have pointed out that YouTube ad spend in Europe was weaker after Russia invaded Ukraine in late February 2022.

“Obviously, when you’re serving ads across the economy… a lot of macroeconomic factors like GDP growth eventually affect advertiser spending,” Pichai said.

He said the economic story is not all bleak and bleak. Building on comments last month from Alphabet’s Chief Business Officer, Philipp Schindler, Pichai noted that people are moving and normalizing again, which is also an important sign for the core ad unit. Google core.

“We’re definitely seeing tourism picking up,” said Pichai. “There are clear signs that people are moving post-pandemic, and so many are returning to normalcy. But what causes uncertainty is that there are a lot of different factors, be it supply chain issues or rising energy prices. And so, adding all of that together would be an easy business uncertainty scenario.”

Pichai points out that the company’s investments in technology are an important way to keep its business strong through times of weakness, and asserts that the company has no plans to slow down. recruiting or withdrawing in specific areas.

“We want to be resilient in moments like these. We’re excited about the opportunities ahead. And so we’re investing. We’re continuing to recruit, bring in talent. great. There are areas where we’re seeing a secular transition, like the cloud and the digital transition. So we’re continuing to invest.”

Alphabet increased its spending on research and development by 22% in the first quarter from a year earlier to $9.1 billion, despite economic uncertainty and market volatility. He also mentioned the company’s diversification of many business lines as a source of strength.

“We invest in the underlying technologies, and we’re in a lot of areas. So in some ways, we’re diversifying. Obviously, we have important products like search. and YouTube. We have computing products related to Android, Google Play, and hardware devices. And the cloud is also a big opportunity area for us. So I think we’re on the way. We’re exposed to a lot of sectors. And we do this globally as a sustainable company. And I think that allows us to take a long-term view and think clearly in the futures. this period”.

Recently, Google kicked off its annual I/O conference by announcing a new smartphone and introducing augmented reality glasses that use artificial intelligence to translate speech to text on the screen. Facebook’s parent company, Meta, and Microsoft are also working on AR devices.

Google has to spend to keep up with competitors in a rapidly growing market, especially with the emergence of its short video service TikTok, which is incredibly popular among younger consumers. Google’s response to TikTok has been YouTube Shorts, the rapidly growing platform, which attracted more than 30 billion daily views at the end of April, up from 15 billion in January 2022.

“We have to meet what our users are asking for. We’re trying to give them the best experience, and so we feel challenged to do better,” Pichai said.

He also highlighted “things like Snapchat, Pinterest – all of which didn’t exist a few years ago” and said that the smartphone and mobile ecosystem are creating new opportunities. “We always have to be nimble, and we have to adapt, and that’s how it feels every Monday when I come to work,” he said.

Question about freedom of speech

He also touched on the balance between free speech and content censorship on the internet, which has recently gained attention with Elon Musk’s plan to buy Twitter. “I grew up in a vast democracy and the importance of free speech and giving a voice to everyone I think is really fundamental,” said Pichai, who was born in India. Search represents what’s on the web today. We only remove things that break the law.”

He added: “In a product like YouTube, where we recommend and where we can amplify content, we have community guidelines. So we have clearly outlined the policies. And we act. And that’s what really allows us to maximize freedom of expression, to help keep the platform safe for everyone involved.”

He also spoke a little bit about the company’s approach to content moderation: “I think it’s important to give people a sense of transparency. And there are ways to do that. For example : we publish our community guidelines, or in the case of search, how our reviewers rate search quality, we publish that.”

Regarding Musk’s plans for Twitter, he said: “I’m an avid Twitter user. I think it’s a hugely important product to the world. I got a lot out of it. And I think so. that there’s value in investing in it for the long term… I think that’s important because it plays an important role in a democratic society… I’d like to see this product continue to get better going forward.”