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3 months ago
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When Google chose to withhold Lambda, its internal conversational Large Language Model (LLM), from public release, it wasn’t because the technology lacked promise. According to Mustafa Suleyman, co-founder of DeepMind and Inflection AI, it was precisely the opposite. Speaking on the CatGPT podcast, he described Lambda as “genuinely ChatGPT before ChatGPT,” a system that was far ahead of its time in terms of conversational capability. But despite its potential, it never made it to the frontline of Google’s product ecosystem. Why? Because of one overarching concern: the existential threat it posed to Google’s own search business.
The Lambda Paradox: Too Good to Ship?
Internally, Lambda impressed nearly everyone who tried it. Suleyman described it as “the first properly conversational LLM” with immense potential to transform how users interact with computers, by simply talking. And yet, Google hesitated.
Roughly half of the company, according to Suleyman, were “brutal skeptics.” Their reluctance wasn’t due to a lack of vision but rooted in commercial and strategic caution. The fear was simple and deeply consequential: Lambda’s conversational interface might reduce the need for traditional search queries, the very backbone of Google’s advertising revenue.
Google’s search business, worth over $100 billion annually, relies heavily on click-throughs and user queries leading to sponsored links. A truly powerful AI that answers queries directly, without sending users to external websites, threatens this monetization engine. In other words, by solving the user’s problem too well, Lambda could cannibalize the business model that made Google the tech giant it is.
From Reluctance to Reinvention: Suleyman’s Departure
Suleyman, however, was on the other side of that debate. To him and several others who eventually left Google to launch their own AI ventures, Lambda wasn’t just a tool, it was the future of search itself. The vision was clear: a new kind of interface where users could speak naturally to an AI and receive not just information, but knowledge, contextual, personalized, instantly digestible.
Frustrated by the internal resistance, Suleyman left Google to pursue that vision, co-founding Inflection AI. With massive funding and access to significant compute infrastructure, Inflection launched Pi (Personal Intelligence), a direct evolution of the ideas first manifested in Lambda.
The Strategic Dilemma: When Innovation Disrupts Your Own Castle
This internal conflict at Google is a textbook example of the “Innovator’s Dilemma” where established players struggle to embrace disruptive technologies that threaten their current revenue models.
What makes conversational AI fundamentally disruptive to search is its orientation. Traditional search engines return links and snippets. But a chatbot, powered by an LLM, provides knowledge—contextualized, relevant, and often actionable responses without sending you elsewhere. Suleyman calls this shift “a transformation from accessing information to accessing knowledge.”
And therein lies the problem for companies like Google: what’s better for users may not be better for business at least not in the short term.
Real-World Implications in 2025
Now, in mid-2025, the tension Suleyman highlighted is unfolding in real time:
OpenAI’s ChatGPT is eating into Google’s usage. With tools like Code Interpreter and custom GPTs, users are spending more time inside ChatGPT and less time googling. Perplexity.ai and You.com offer AI-first search interfaces, answering questions in plain language, citing sources, and minimizing traditional link-lists. Google’s own Gemini has launched, but cautiously. Even now, Gemini is layered carefully within search and workspace apps, often prompting users to opt in, signaling ongoing caution.
Alphabet’s quarterly reports have begun to reflect shifts in user behavior, particularly among younger users who prefer chat-first interfaces. While the core ad revenue remains strong, the defensive posture suggests an awareness that it could erode fast if the paradigm shifts.
Since the public debut of ChatGPT, Google has accelerated its AI roadmap, but also seen high-profile internal reorganizations, suggesting ongoing struggles to balance innovation with revenue protection.
This is not just about AI replacing search. It’s about who owns the default interface for digital interaction in the post-screen world. Conversational AI isn’t just an upgrade to existing tools, it’s a new platform, akin to the jump from desktop to mobile.
And Google, by hesitating to deploy Lambda, may have missed the chance to define that platform. While it is still very much a dominant player, the battle for AI interface leadership is now multi-fronted and no longer under Google’s exclusive control.
