For over a year, executives have touted "artificial intelligence" to showcase their companies' technological advancements, driving investor interest in reduced costs and enhanced productivity. Recently, Google (GOOG, GOOGL) highlighted AI in its defense against a Justice Department proposal potentially aimed at breaking up the company. In a blog post, Google asserted that the emerging AI market and the evolution of search demonstrate flaws in the government’s case. The Justice Department proposed remedies to enhance competition in the search engine sector, but Google claims this approach risks harming consumers and U. S. competitiveness. Lee-Anne Mulholland, Google's VP of regulatory affairs, emphasized that competition in information retrieval is thriving with new entrants and AI innovations. While AI trends create competitive pressures for Google, Wedbush analyst Dan Ives suggests this argument may bolster Google's defense against monopoly claims. Conversely, DA Davidson analyst Gil Luria warns that the DOJ's focus on these technological advancements is precisely why they are intervening, wanting to prevent Google from converting its search monopoly into an AI monopoly. Google's substantial investment in AI tools poses risks, as transitioning its fundamental search product could disrupt its established monetization strategy.

This shift may lead to challenges in generating revenue comparable to its traditional ad model. Analysts speculate on the unknowns of search monetization within an AI context, with some suggesting advertisers may pay a premium for visibility in AI results. Despite highlighting AI’s potential, such advancements do not inherently shield Google from market power abuse allegations. Regulatory scrutiny is already directed toward major cloud providers involved in AI, particularly following a Federal Trade Commission investigation into multibillion-dollar deals involving Microsoft, Amazon, and Google's partnerships with AI startups. Hamza Shaban covers market and economic news for Yahoo Finance. Follow him for updates on technology's impact on the stock market.