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Google, the sleeping giant in global AI race, now ‘fully awake’

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Since the launch of ChatGPT three years ago, analysts and technologists — even a Google engineer and the company’s former chief executive — have declared Google behind in the high-stakes race to develop artificial intelligence.

Not anymore.

The internet giant has released new AI software and struck deals, such as a chip tie-up with Anthropic PBC, that have reassured investors the company won’t easily lose to ChatGPT creator OpenAI and other rivals. Google’s newest multi-purpose model, Gemini 3, won immediate praise for its capabilities in reasoning and coding, as well as niche tasks that have tripped up AI chatbots. Google’s cloud business, once an also-ran, is growing steadily, thanks in part to the global rush to develop AI services and demand for compute.

And there are signs of rising demand for Google’s specialized AI chips, one of the few viable alternatives to Nvidia Corp.’s dominant gear. A report on Monday that Meta Platforms Inc. is in talks to use Google’s chips sent shares of its parent Alphabet Inc. soaring. The stock has added nearly $1 trillion in market capitalization since mid-October, helped by Warren Buffett taking a $4.9 billion stake during the third quarter and broader Wall Street enthusiasm for its AI efforts.

Google owner Alphabet Inc.’s shares rose as much as 3.22% in New York on Tuesday. The company is on track to hit a $4 trillion market capitalization for the first time.

SoftBank Group, one of OpenAI’s biggest backers, fell to a two-month low on Tuesday on worries about the competition from Google’s Gemini. Nvidia shares fell as much as 5.51% on Tuesday, erasing $243 billion in market value.

“Google has arguably always been the dark horse in this AI race,” said Neil Shah, analyst and cofounder at Counterpoint Research. It’s “a sleeping giant that is now fully awake.”

For years, Google executives have argued that deep, costly research would help the company fend off rivals, defend its turf as the leading search engine and invent the computing platforms of tomorrow. Then ChatGPT came along, presenting the first real threat to Google search in years, even though Google pioneered the tech underpinning OpenAI’s chatbot. Still, Google has plenty of resources that OpenAI doesn’t: a corpus of ready data to train and refine AI models; flowing profits; and its own computing infrastructure. 

“We’ve taken a full, deep, full-stack approach to AI,” Sundar Pichai, chief executive officer for Google and Alphabet, told investors last quarter. “And that really plays out.”

Any concerns that Google might be held back by regulators are dying away. The company recently avoided the most severe outcome from a US anti-monopoly case — a breakup of its business — in part because of the perceived threat from AI newcomers. And the search giant has shown some progress in the longtime effort to diversify beyond its core business. Waymo, Alphabet’s driverless car unit, is coming to several new cities and just added freeway driving to its taxi service, a feat made possible by the company’s enormous research and investment.

Some of Google’s edge comes from its economics. It’s one of the few companies that produces what the industry calls the full stack in computing. Google makes the AI apps people use, like its popular Nano Banana image generator, as well as the software models, the cloud computing architecture and the chips underneath. The company also has a data goldmine for constructing AI models from its search index, Android phones and YouTube — data that Google often keeps for itself. That means, in theory, Google has more control over the technical direction of AI products and doesn’t necessarily have to pay suppliers, unlike OpenAI.

Several tech companies, including Microsoft Corp. and OpenAI, have plotted ways to develop their own semiconductors or forge ties that make them less reliant on Nvidia’s bestsellers. For years, Google was effectively its own sole customer for its homegrown processors, called tensor processing units, or TPUs, which the company first designed more than a decade ago to speed up the generation of search results and has since adapted to handle complex AI tasks. That’s changing. AI startup Anthropic said in October said it would use as many as 1 million Google TPUs in a deal worth tens of billions of dollars.

On Monday, tech publication the Information reported that Meta planned to use Google’s chips in its data centers in 2027. Google declined to address the specific plans, but said that its cloud business is “accelerating demand” for both its custom TPUs and Nvidia’s graphics processing units. “We are committed to supporting both, as we have for years,” a spokesperson wrote in a statement.

Meta declined to comment on the report on Monday night.

“We’re delighted by Google’s success,” a spokesperson for Nvidia said in a statement Tuesday. “They’ve made great advances in AI, and we continue to supply to Google.” The spokesperson added: “Nvidia is a generation ahead of the industry – it’s the only platform that runs every AI model and does it everywhere computing is done.”

Analysts read the Meta news as a signal of Google’s success. “Many others have failed in their quest to build custom chips, but Google can clearly add another string to its bow here,” Ben Barringer, head of technology research for Quilter Cheviot, wrote in an email.

Google has taken risks to get here. In early 2023, Google consolidated its AI efforts under Demis Hassabis, the leader of its London AI lab DeepMind. The reshuffle had some bumps, most notably a botched rollout of an image-generation product. For several years, DeepMind pursued research in areas like protein-folding that led to new commercial strategies (and a Nobel prize) but contributed little to Google’s bottom line. Under the reorganization, the AI unit is focused almost squarely on foundational models that keep pace with OpenAI, Microsoft and others.

Hassabis, a renowned computer scientist, has helped retain key AI engineers despite multimillion-dollar offers from rivals. His boss, Pichai, has been willing to splurge on talent.

Gemini 3 Pro has risen to the top of closely watched AI leaderboards on LMArena and Humanity’s Last Exam. Andrej Karpathy, a founding member of OpenAI, said it’s “clearly a tier 1 LLM,” referring to large language models. Google pitched the model as one that can solve complex science and math problems, and address nagging issues — such as generating images and overlaid text with incorrect spelling — that might deter enterprise customers from adopting AI services more widely.

Consumer interest is harder to gauge. Google said last week that 650 million people use its Gemini app. OpenAI recently said ChatGPT hit 800 million weekly users. As of October, Gemini’s app had 73 million monthly downloads, well shy of ChatGPT’s 93 million monthly downloads, according to research firm Sensor Tower.

Google is an advertising behemoth, but it has historically struggled to find other commercial models. Its cloud business reported third-quarter revenue of $15.2 billion, up 34% from the prior year. Still, that remains in third-place behind Microsoft and Amazon Web Services, which posted more than double Google’s cloud sales in the most recent quarter. Counterpoint Research’s Shah said Google’s AI adoption with enterprises lags Microsoft and Anthropic.

Meanwhile, OpenAI is targeting profits by selling a premium version of ChatGPT and adjacent software to companies. It’s cutting deals with chipmakers from Broadcom Inc. to Advanced Micro Devices Inc. to Nvidia to support its AI ambitions.

Google’s TPUs are mostly attractive to a handful of companies with big computing bills, like Meta and Anthropic,  said Meryem Arik, CEO of the AI startup Doubleword.

And the chip industry is “not a zero-sum game with just one winner,” said Barringer.

For one, AI developers can only access Google’s chips through the company’s own cloud service. They can use Nvidia’s  graphics processing units, or GPUs, more flexibly.  “As soon as you use TPUs, you’re locked into” the Google cloud ecosystem, said Arik.

Being tied to a single supplier might have been something companies avoided. That’s no longer the case for Google, thanks to its advances in AI.

“It’s definitely fair to say that Google is back in the game with Gemini 3,” said Thomas Husson, analyst at Forrester. “In fact, to paraphrase a quote attributed to Mark Twain, reports of Google’s death have been widely exaggerated, not to say irrelevant.”



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Senate Dems’ plan to fix Obamacare premiums adds nearly $300 billion to deficit, CRFB says

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December 5, 2025

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The Committee for a Responsible Federal Budget (CRFB) is a nonpartisan watchdog that regularly estimates how much the U.S. Congress is adding to the $38 trillion national debt.

With enhanced Affordable Care Act (ACA) subsidies due to expire within days, some Senate Democrats are scrambling to protect millions of Americans from getting the unpleasant holiday gift of spiking health insurance premiums. The CRFB says there’s just one problem with the plan: It’s not funded.

“With the national debt as large as the economy and interest payments costing $1 trillion annually, it is absurd to suggest adding hundreds of billions more to the debt,” CRFB President Maya MacGuineas wrote in a statement on Friday afternoon.

The proposal, backed by members of the Senate Democratic caucus, would fully extend the enhanced ACA subsidies for three years, from 2026 through 2028, with no additional income limits on who can qualify. Those subsidies, originally boosted during the pandemic and later renewed, were designed to lower premiums and prevent coverage losses for middle‑ and lower‑income households purchasing insurance on the ACA exchanges.

CRFB estimated that even this three‑year extension alone would add roughly $300 billion to federal deficits over the next decade, largely because the federal government would continue to shoulder a larger share of premium costs while enrollment and subsidy amounts remain elevated. If Congress ultimately moves to make the enhanced subsidies permanent—as many advocates have urged—the total cost could swell to nearly $550 billion in additional borrowing over the next decade.

Reversing recent guardrails

MacGuineas called the Senate bill “far worse than even a debt-financed extension” as it would roll back several “program integrity” measures that were enacted as part of a 2025 reconciliation law and were intended to tighten oversight of ACA subsidies. On top of that, it would be funded by borrowing even more. “This is a bad idea made worse,” MacGuineas added.

The watchdog group’s central critique is that the new Senate plan does not attempt to offset its costs through spending cuts or new revenue and, in their view, goes beyond a simple extension by expanding the underlying subsidy structure.

The legislation would permanently repeal restrictions that eliminated subsidies for certain groups enrolling during special enrollment periods and would scrap rules requiring full repayment of excess advance subsidies and stricter verification of eligibility and tax reconciliation. The bill would also nullify portions of a 2025 federal regulation that loosened limits on the actuarial value of exchange plans and altered how subsidies are calculated, effectively reshaping how generous plans can be and how federal support is determined. CRFB warned these reversals would increase costs further while weakening safeguards designed to reduce misuse and error in the subsidy system.

MacGuineas said that any subsidy extension should be paired with broader reforms to curb health spending and reduce overall borrowing. In her view, lawmakers are missing a chance to redesign ACA support in a way that lowers premiums while also improving the long‑term budget outlook.

The debate over ACA subsidies recently contributed to a government funding standoff, and CRFB argued that the new Senate bill reflects a political compromise that prioritizes short‑term relief over long‑term fiscal responsibility.

“After a pointless government shutdown over this issue, it is beyond disappointing that this is the preferred solution to such an important issue,” MacGuineas wrote.

The off-year elections cast the government shutdown and cost-of-living arguments in a different light. Democrats made stunning gains and almost flipped a deep-red district in Tennessee as politicians from the far left and center coalesced around “affordability.”

Senate Minority Leader Chuck Schumer is reportedly smelling blood in the water and doubling down on the theme heading into the pivotal midterm elections of 2026. President Donald Trump is scheduled to visit Pennsylvania soon to discuss pocketbook anxieties. But he is repeating predecessor Joe Biden’s habit of dismissing inflation, despite widespread evidence to the contrary.

“We fixed inflation, and we fixed almost everything,” Trump said in a Tuesday cabinet meeting, in which he also dismissed affordability as a “hoax” pushed by Democrats.​

Lawmakers on both sides of the aisle now face a politically fraught choice: allow premiums to jump sharply—including in swing states like Pennsylvania where ACA enrollees face double‑digit increases—or pass an expensive subsidy extension that would, as CRFB calculates, explode the deficit without addressing underlying health care costs.



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Netflix–Warner Bros. deal sets up $72 billion antitrust test

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December 5, 2025

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Netflix Inc. has won the heated takeover battle for Warner Bros. Discovery Inc. Now it must convince global antitrust regulators that the deal won’t give it an illegal advantage in the streaming market. 

The $72 billion tie-up joins the world’s dominant paid streaming service with one of Hollywood’s most iconic movie studios. It would reshape the market for online video content by combining the No. 1 streaming player with the No. 4 service HBO Max and its blockbuster hits such as Game Of Thrones, Friends, and the DC Universe comics characters franchise.  

That could raise red flags for global antitrust regulators over concerns that Netflix would have too much control over the streaming market. The company faces a lengthy Justice Department review and a possible US lawsuit seeking to block the deal if it doesn’t adopt some remedies to get it cleared, analysts said.

“Netflix will have an uphill climb unless it agrees to divest HBO Max as well as additional behavioral commitments — particularly on licensing content,” said Bloomberg Intelligence analyst Jennifer Rie. “The streaming overlap is significant,” she added, saying the argument that “the market should be viewed more broadly is a tough one to win.”

By choosing Netflix, Warner Bros. has jilted another bidder, Paramount Skydance Corp., a move that risks touching off a political battle in Washington. Paramount is backed by the world’s second-richest man, Larry Ellison, and his son, David Ellison, and the company has touted their longstanding close ties to President Donald Trump. Their acquisition of Paramount, which closed in August, has won public praise from Trump. 

Comcast Corp. also made a bid for Warner Bros., looking to merge it with its NBCUniversal division.

The Justice Department’s antitrust division, which would review the transaction in the US, could argue that the deal is illegal on its face because the combined market share would put Netflix well over a 30% threshold.

The White House, the Justice Department and Comcast didn’t immediately respond to requests for comment. 

US lawmakers from both parties, including Republican Representative Darrell Issa and Democratic Senator Elizabeth Warren have already faulted the transaction — which would create a global streaming giant with 450 million users — as harmful to consumers.

“This deal looks like an anti-monopoly nightmare,” Warren said after the Netflix announcement. Utah Senator Mike Lee, a Republican, said in a social media post earlier this week that a Warner Bros.-Netflix tie-up would raise more serious competition questions “than any transaction I’ve seen in about a decade.”

European Union regulators are also likely to subject the Netflix proposal to an intensive review amid pressure from legislators. In the UK, the deal has already drawn scrutiny before the announcement, with House of Lords member Baroness Luciana Berger pressing the government on how the transaction would impact competition and consumer prices.

The combined company could raise prices and broadly impact “culture, film, cinemas and theater releases,”said Andreas Schwab, a leading member of the European Parliament on competition issues, after the announcement.

Paramount has sought to frame the Netflix deal as a non-starter. “The simple truth is that a deal with Netflix as the buyer likely will never close, due to antitrust and regulatory challenges in the United States and in most jurisdictions abroad,” Paramount’s antitrust lawyers wrote to their counterparts at Warner Bros. on Dec. 1.

Appealing directly to Trump could help Netflix avoid intense antitrust scrutiny, New Street Research’s Blair Levin wrote in a note on Friday. Levin said it’s possible that Trump could come to see the benefit of switching from a pro-Paramount position to a pro-Netflix position. “And if he does so, we believe the DOJ will follow suit,” Levin wrote.

Netflix co-Chief Executive Officer Ted Sarandos had dinner with Trump at the president’s Mar-a-Lago resort in Florida last December, a move other CEOs made after the election in order to win over the administration. In a call with investors Friday morning, Sarandos said that he’s “highly confident in the regulatory process,” contending the deal favors consumers, workers and innovation. 

“Our plans here are to work really closely with all the appropriate governments and regulators, but really confident that we’re going to get all the necessary approvals that we need,” he said.

Netflix will likely argue to regulators that other video services such as Google’s YouTube and ByteDance Ltd.’s TikTok should be included in any analysis of the market, which would dramatically shrink the company’s perceived dominance.

The US Federal Communications Commission, which regulates the transfer of broadcast-TV licenses, isn’t expected to play a role in the deal, as neither hold such licenses. Warner Bros. plans to spin off its cable TV division, which includes channels such as CNN, TBS and TNT, before the sale.

Even if antitrust reviews just focus on streaming, Netflix believes it will ultimately prevail, pointing to Amazon.com Inc.’s Prime and Walt Disney Co. as other major competitors, according to people familiar with the company’s thinking. 

Netflix is expected to argue that more than 75% of HBO Max subscribers already subscribe to Netflix, making them complementary offerings rather than competitors, said the people, who asked not to be named discussing confidential deliberations. The company is expected to make the case that reducing its content costs through owning Warner Bros., eliminating redundant back-end technology and bundling Netflix with Max will yield lower prices.



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The rise of AI reasoning models comes with a big energy tradeoff

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December 5, 2025

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Nearly all leading artificial intelligence developers are focused on building AI models that mimic the way humans reason, but new research shows these cutting-edge systems can be far more energy intensive, adding to concerns about AI’s strain on power grids.

AI reasoning models used 30 times more power on average to respond to 1,000 written prompts than alternatives without this reasoning capability or which had it disabled, according to a study released Thursday. The work was carried out by the AI Energy Score project, led by Hugging Face research scientist Sasha Luccioni and Salesforce Inc. head of AI sustainability Boris Gamazaychikov.

The researchers evaluated 40 open, freely available AI models, including software from OpenAI, Alphabet Inc.’s Google and Microsoft Corp. Some models were found to have a much wider disparity in energy consumption, including one from Chinese upstart DeepSeek. A slimmed-down version of DeepSeek’s R1 model used just 50 watt hours to respond to the prompts when reasoning was turned off, or about as much power as is needed to run a 50 watt lightbulb for an hour. With the reasoning feature enabled, the same model required 7,626 watt hours to complete the tasks.

The soaring energy needs of AI have increasingly come under scrutiny. As tech companies race to build more and bigger data centers to support AI, industry watchers have raised concerns about straining power grids and raising energy costs for consumers. A Bloomberg investigation in September found that wholesale electricity prices rose as much as 267% over the past five years in areas near data centers. There are also environmental drawbacks, as Microsoft, Google and Amazon.com Inc. have previously acknowledged the data center buildout could complicate their long-term climate objectives. 

More than a year ago, OpenAI released its first reasoning model, called o1. Where its prior software replied almost instantly to queries, o1 spent more time computing an answer before responding. Many other AI companies have since released similar systems, with the goal of solving more complex multistep problems for fields like science, math and coding.

Though reasoning systems have quickly become the industry norm for carrying out more complicated tasks, there has been little research into their energy demands. Much of the increase in power consumption is due to reasoning models generating much more text when responding, the researchers said. 

The new report aims to better understand how AI energy needs are evolving, Luccioni said. She also hopes it helps people better understand that there are different types of AI models suited to different actions. Not every query requires tapping the most computationally intensive AI reasoning systems.

“We should be smarter about the way that we use AI,” Luccioni said. “Choosing the right model for the right task is important.”

To test the difference in power use, the researchers ran all the models on the same computer hardware. They used the same prompts for each, ranging from simple questions — such as asking which team won the Super Bowl in a particular year — to more complex math problems. They also used a software tool called CodeCarbon to track how much energy was being consumed in real time.

The results varied considerably. The researchers found one of Microsoft’s Phi 4 reasoning models used 9,462 watt hours with reasoning turned on, compared with about 18 watt hours with it off. OpenAI’s largest gpt-oss model, meanwhile, had a less stark difference. It used 8,504 watt hours with reasoning on the most computationally intensive “high” setting and 5,313 watt hours with the setting turned down to “low.” 

OpenAI, Microsoft, Google and DeepSeek did not immediately respond to a request for comment.

Google released internal research in August that estimated the median text prompt for its Gemini AI service used 0.24 watt-hours of energy, roughly equal to watching TV for less than nine seconds. Google said that figure was “substantially lower than many public estimates.” 

Much of the discussion about AI power consumption has focused on large-scale facilities set up to train artificial intelligence systems. Increasingly, however, tech firms are shifting more resources to inference, or the process of running AI systems after they’ve been trained. The push toward reasoning models is a big piece of that as these systems are more reliant on inference.

Recently, some tech leaders have acknowledged that AI’s power draw needs to be reckoned with. Microsoft CEO Satya Nadella said the industry must earn the “social permission to consume energy” for AI data centers in a November interview. To do that, he argued tech must use AI to do good and foster broad economic growth.



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