Google Search’s AI era comes into focus

Good morning! We recently tested Tesla’s Full-Self Driving software against Waymo’s robotaxis, with the former making one big mistake. Turns out Tesla CEO Elon Musk wasn’t a big fan of our test. However, he said the company’s soon-to-be-launched robotaxis will avoid certain areas of Austin if the company deems them unsafe.

In today’s big story, we’re hitting some of the highlights from Google’s big annual developer conference, including a major update to Search and a new tool that could upend Hollywood.

What’s on deck

Markets: What was long considered the safest corner of the market is no longer looking so secure.

Tech: An exclusive conversation with Instagram CEO Adam Mosseri.

Business: Millennials aren’t ready to inherit their parents’ homes. There’s a whole industry devoted to easing the handoff.

But first, we’re entering AI Mode.

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The big story

Search’s AI era

Google Search is getting an AI-powered makeover.

The search engine will be more conversational and eventually include an AI assistant as it looks to fend off competition from high-profile startups like OpenAI and Anthropic. AI Mode, set to roll out this week, will open up in a new tab and allow users to ask follow-up or more complex questions.

The update came at Google’s annual developer conference, Google I/O, where the tech giant gave the clearest picture yet of how it sees its crown jewel keeping pace in a world dominated by AI, writes BI’s Hugh Langley.

We always knew this was where things were headed. From the moment ChatGPT broke onto the scene in late 2022, there were rumbles about Search’s future. Chatbots were viewed as a potential alternative for navigating the internet.

That put Google in a tricky situation. Search could benefit from AI, but there’s also the risk of upsetting the company’s golden goose.

At last year’s I/O, Google offered a glimpse into the change users could expect from AI. Behind a catchy phrase — “Google will do the Googling for you” — the company showed off its AI Overviews feature you’re probably familiar with.

But even with Search’s initial AI adoption, smaller AI competitors were making serious progress. An Apple executive said AI engines were eating into Google’s market share.

Google quickly denied Search was in trouble, but AI’s impact is undeniable.

Which brings us to Tuesday’s announcement, which Google Search head Liz Reid called “a glimpse of what’s to come in Search overall.”

Google also did a bit of its own disrupting.

The tech giant unveiled Flow, a new AI-powered moviemaking tool. BI’s Alistair Barr has the rundown on what Flow can do and why traditional studios should be nervous.

(If you want to read more of Alistair — and you should — you can subscribe to his weekly newsletter Tech Memo, which comes out every Friday and focuses on Big Tech.)

To be clear, Google is pitching Flow as a tool for studios, not a threat to them. But it’s easy to see how it could make one uneasy. The millions invested into high production-value storytelling doesn’t look as good if you can do the same thing with AI for a fraction of the cost.

Of course, the studios could adopt the tech to help them work more efficiently and stay ahead of the competition.

Just ask Google.

3 things in markets

1. Bye-bye, bond safety. The bond market has had a rough few months, but after Moody’s recently downgraded US debt, many Wall Street titans are questioning bonds’ safety. The advice for investors is simple, but unnerving: Don’t count on bonds to shield you during times of volatility.

2. The prize for Bridgewater’s new research competition: $25K and a job interview. The hedge fund is crowdsourcing ideas on positioning itself in the new global economic order. Contestants can submit predictions on how countries’ protectionist policies impact the global economy — and five could win big.

3. Crypto regulation is one step closer to becoming law. The GENIUS Act is headed for Senate debate as bitcoin is poised for a record high. Here’s what to know about the bill, which is focused on creating rules around stablecoins.

3 things in tech

1. Instagram is all about … privacy? Instagram boss Adam Mosseri told BI’s Peter Kafka about the “paradigm shift” from users’ public posting to private sharing. He also talked about the app’s push into messaging, why it shows recommended posts, Threads’ origin story, and more.

2. Tech’s new hiring playbook: age before beauty. Silicon Valley used to idolize youth, but now, big and little tech companies are looking for more experienced workers. AI is a big reason, since it’s taking over more junior tasks. Younger engineers now have to hustle harder than ever.

3. To hype or hide AI? Investors love to hear about a company’s AI ambitions, but customers hate it. Duolingo is the latest company to learn this after its CEO doubled down on its AI vision, sparking major backlash. This tension over AI has tech CEOs walking a tightrope.

3 things in business

1. Boomer home dilemma. America is on the precipice of a major wealth transfer through home ownership. Millennials stand to gain, but there are lots of kinks that could make them unprepared to inherit. Companies like Flock Homes may have the answer.

2. Elon Musk goes all in on tech, less so on politics. Musk told an interviewer in Qatar he’ll still be Tesla’s CEO in five years and would stop only “if I’m dead.” He also isn’t budging on his legal battle with Sam Altman’s OpenAI, which he accused of abandoning its nonprofit mission. However, Musk is scaling back political spending, saying he’s “done enough.”

3. Why Walmart is raising prices and Home Depot isn’t. Last week, Walmart said it would raise prices over tariffs, but on Tuesday, Home Depot announced it wouldn’t, saying it would rely on other “levers” to avoid increasing prices. Here’s four reasons why the retail giants are looking at new import costs differently.

In other news

• Google cofounder Sergey Brin shares why he’s back at the company ‘pretty much every day now’ to work on AI.
• Inside Asia’s biggest tech trade show, where Nvidia’s ‘Jensen’ is the hottest name drop.
• Musk bashes Bill Gates’ comments on USAID: ‘Show us any evidence.’
• Google turns to Warby Parker to develop smart glasses, competing with Meta’s Ray-Bans.
• Wall Street investors share three predictions for what could make or break the stock market’s recent rebound.
• The unsolicited ‘offers flooded in’ for red-hot legal tech startup Legora’s new funding round.
• Not quite the American dream: Renting is becoming a better deal, even if you’re wealthy or a retiree.
• YouTube is going to new lengths to nab an Emmy.

What’s happening today

• Target, Zoom, and Lowe’s report earnings.

The Business Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Hallam Bullock, senior editor, in London. Grace Lett, editor, in Chicago. Amanda Yen, associate editor, in New York. Lisa Ryan, executive editor, in New York. Ella Hopkins, associate editor, in London. Elizabeth Casolo, fellow, in Chicago.

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