ChatGPT presents Alphabet and its Google subsidiary with the greatest challenge in its relatively brief corporate history. Long the leader in generating highly accurate and reliable answers to even the most challenging questions, ChatGPT has confronted Google with the ability to not only answer complex queries, but also carry on a conversation, generate creative images, compose songs and poems, and even write full-length research reports. In short, ChatGPT represents a newer, highly advanced, and possibly superior approach. As a result investors fear that Google has lost its edge, and may lose relevance in the age of generative AI.

In trying to determine whether newer is better, it’s useful to recall the epic battle between two futuristic robots, or Cyborgs, in the movie Terminator 2: Judgment Day. A first generation terminator, the T-800, played by Arnold Schwarzenegger, is sent back in time to save its creator, and in the process, humanity itself. The T-800 informs us, that its mind is a neural network, coupled with an image processor that enables it to constantly learn from experience and its environment.

A second generation terminator (Robert Patrick) is sent on a parallel mission to confront the T-800. As an advanced prototype, the T-1000 is made of a liquid metal alloy, replete with shape-shifting features that allow it to mimic another person’s appearance and voice, as well as weaponize its own body, all in an attempt to foil and, if possible, destroy the first terminator.

While Google has always been highly secretive about the technology that drives its search results, it has been using machine learning and AI in its search algorithms for many years. Like the T-800, the Google search engine constantly learns and embeds new technologies. Well aware of the threat posed by ChatGPT and other generative AI platforms, Google has dramatically improved its AI features over the last 18 months, and closed the gap by deploying its Gemini AI assistant not only to fine-tune answers to user queries, but also to offer follow-up assistance like ChatGPT.

Like the second generation terminator, which was forced to confront a surprisingly clever adversary, so too has ChatGPT encountered a capable and highly advanced opponent. As each company invests significant capital to enhance its AI features, Google has the advantage of being able to monetize its investments through its highly profitable ad business, as well as its enterprise business, Google Cloud. The question for ChatGPT is whether it can continue to evolve and demonstrate the ability to effectively outsmart a formidable adversary. As a spoiler alert, recall that in the movie the first generation terminator neutralized its opponent by luring it into a vat of molten steel.

In the near-term it is unlikely there will be such a decisive victory by either Google or ChatGPT. In the meantime, everyday computer users will benefit from the spirited competition between the two AI-driven engines.