While tech giants could technically replicate Perplexity, their core business models—advertising for Google, e-commerce for Amazon—create a fundamental conflict of interest. An independent player can align purely with the user's best interests, creating a strategic opening that incumbents are structurally unable to fill without cannibalizing their primary revenue streams.

Tech giants like Google and Meta are positioned to offer their premium AI models for free, leveraging their massive ad-based business models. This strategy aims to cut off OpenAI's primary revenue stream from $20/month subscriptions. For incumbents, subsidizing AI is a strategic play to acquire users and boost market capitalization.

While competitors focus on subscription models for their AI tools, Google's primary strategy is to leverage its core advertising business. By integrating sponsored results into its AI-powered search summaries, Google is the first to turn on an ad-based revenue model for generative AI at scale, posing a significant threat to subscription-reliant players like OpenAI.

While other AI companies are hesitant, Google is expected to lead LLM ad integration. As a company built on ads, it is culturally positioned to implement monetization quickly and effectively, unlike competitors that may view ads as a necessary evil rather than a core competency.

Google's competitive advantage in AI is its vertical integration. By controlling the entire stack from custom TPUs and foundational models (Gemini) to IDEs (AI Studio) and user applications (Workspace), it creates a deeply integrated, cost-effective, and convenient ecosystem that is difficult to replicate.

Google can afford to offer its LLM for free, creating immense pricing pressure on competitors like OpenAI. This strategy aims to eliminate competition by making their business models unprofitable, securing a monopoly for Google before it begins to monetize.

Google's Gemini models show that a company can recover from a late start to achieve technical parity, or even superiority, in AI. However, this comeback highlights that the real challenge is translating technological prowess into product market share and user adoption, where it still lags.

Google's strategy may be to offer its powerful AI models for free or at a significant loss. As a trillion-dollar company, it can sustain these losses indefinitely, forcing smaller competitors like OpenAI into an "endless sea of red ink" until they collapse, thereby securing a market monopoly.

OpenAI is now reacting to Google's advancements with Gemini 3, a complete reversal from three years ago. Google's strengths in infrastructure, proprietary chips, data, and financial stability are giving it a significant competitive edge, forcing OpenAI to delay initiatives and refocus on its core ChatGPT product.