Published by Global Banking and Finance Review
Posted on May 20, 2025
By Kenrick Cai, Jeffrey Dastin, Greg Bensinger
MOUNTAIN VIEW, California (Reuters) -Alphabet's Google said on Tuesday it would put artificial intelligence into the hands of more Web surfers while teasing a $249.99-a-month subscription for its AI power users, its latest effort to fend off growing competition from startups like OpenAI.
Google unveiled the plans amid a flurry of demos that included new augmented-reality glasses during its annual I/O conference in Mountain View, California, which has adopted a tone of increased urgency since the rise of generative AI challenged the tech company's longtime stronghold of organizing and retrieving information on the internet.
In recent months, Google has become more aggressive in asserting it has caught up to competitors after appearing flat-footed upon the release of Microsoft-backed OpenAI's ChatGPT in 2022.
Alphabet CEO Sundar Pichai said at the conference: "Over and over, we've been able to deliver the best models at the most effective price point."
Its AI assistant Gemini app now has more than 400 million monthly active users, Pichai said.
In a major update, the company said consumers across the United States now can switch Google Search into “AI Mode.” Showcased in March as an experiment open to test users, the feature dispenses with the Web’s standard fare in favor of computer-generated answers for complicated queries.
Google also announced an “AI Ultra Plan,” which for $249.99 monthly provides users with higher limits on AI and early access to experimental tools like Project Mariner, an internet browser extension that can automate keystrokes and mouse clicks, and Deep Think, a version of its top-shelf Gemini model that is more capable of reasoning through complex tasks.
The price is comparable to $200 monthly plans from AI model developers OpenAI and Anthropic, underscoring how companies are exploring ways to pay for the exorbitant costs of AI development. Google's new plan also includes 30 terabytes of cloud storage and an ad-free YouTube subscription.
Google already offers other subscription options, including a $19.99-per-month service with access to some AI capabilities unavailable for most free users and cheaper plans with additional cloud storage. Last week, the company told Reuters it had signed up more than 150 million subscribers across those plans.
Pichai told reporters that the rise of generative AI was not at the full expense of online search.
This “feels very far from a zero-sum moment,” said Pichai. “The kind of use cases we are serving in search is dramatically expanding” because of AI.
Alphabet shares closed 1.5% lower at $165.32 on Tuesday.
RETURN TO GLASSES
Google made a return to a bumpy effort years ago around augmented-reality glasses, demonstrating frames with its new Android XR software. Since that time, rival Meta Platforms has brought its own glasses with AI to market.
On stage, two Google officials had a conversation in different languages while the glasses typed up translations for them, viewed through the frames' lenses.
Gemini, meanwhile, answered queries about one of the wearer's surroundings as she walked around Mountain View's Shoreline Amphitheater.
An XR headset being developed in partnership with Samsung will launch later this year, an official said. Google also announced new partnerships with glasses designers Warby Parker and Gentle Monster to develop headsets with Android XR.
SEARCH PRESSURES
Earlier this month, Alphabet stock lost $150 billion in market value in one day after an Apple executive testified during one of Google's antitrust cases that AI offerings had caused a decline in searches on Apple's Safari Web browser for the first time.
In turn, some analysts reassessed how to measure Google's dominant search market share, with one estimate stating it could fall to less than 50% from around 90% in five years. The analysts cited a behavioral shift drawing consumers toward AI chatbots where they once used traditional search engines.
However, Robby Stein, an executive on the search team, in an interview said allowing users to answer more complex questions through AI could enable "new opportunities to create hyper-relevant, useful advertising." Ads make up the majority of Google's revenue.
Investment in AI accounts for most of Alphabet's $75 billion in forecasted capital expenditures this year, a dramatic uptick from the $52.5 billion in 2024 spending that the company reported.
Tuesday's announcements included further updates to Google's effort to deliver to users a "universal AI agent," which can perform tasks on someone’s behalf without additional prompting.
In a number of demos, Google drew on capabilities developed in a testing ground it has called Project Astra to show off what its latest AI could do.
These included pointing a smartphone camera at a written invitation and having AI add the event to a user’s calendar. Another showed how Google's AI could remind students of an upcoming exam and prompt them with an AI-generated quiz to study the material.
Google also presented a new AI model called Veo 3 that generates video and audio to create more realistic film snippets for creators.
(Reporting by Kenrick Cai, Jeffrey Dastin and Greg Bensinger in Mountain View, California; Additional reporting by Juby Babu in Mexico City; Editing by Sam Holmes and Matthew Lewis)
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