Ed Zitron
Writes Where's Your Ed At, a newsletter on the AI industry's finances, and hosts the Better Offline podcast covering the same territory in audio.
“AI does not help a business get better. We do not have evidence for this. And indeed, we now have tangible evidence that it makes the business worse. That is crazy. It is crazy that Google spent $50 billion in capex in a quarter for a product that is making its business materially weaker.”
The Tech Report · October 2026
Context
The host asked why Alphabet's and Meta's earnings were punished when the market already knew they were spending heavily on AI. Zitron points to Google's search miss and argues its AI search mode earns less than the old blue-link results.
Transcript
…think. So until things start really collapsing, the real world will not realize. But it will be when you are at work and you're suddenly told, okay, actually, don't use this as much. Oh, actually, please use these models. I've heard reports of this, but this is where you're really going to feel it.
…be spending this money on AI. We've known for a long time that they were going to spend this money on AI. They told us they were going to do it. And now we're seeing it on paper. So why is it having that impact now that when it's actually on paper and they're seeing it, it's dropping 10 to 12%?
…a selection of blue links to a 4,000-word essay that has a mushy peas recipe at the end. You now go and look on Google, but that is generating less revenue. It's quite literally what I said in 2023, amongst other early, early and wrong predictions around timing, by the way. Just was way ahead of my skis on the timing. Really, this did not end in 2025. But it's something I've seen, which is AI does not help a business get better. We do not have evidence for this. And indeed, we now have tangible evidence that it makes the business worse. That is crazy. It is crazy that Google spent $50 billion in capex in a quarter for a product that is making its business materially weaker. And what's crazy is it also shows that AI is propping it up mostly through Anthropic and OpenAI's compute spend. And the other thing we found out from the Anthropic IPO that was quite interesting was that apparently Anthropic considers 100% of the revenue that Google and Amazon get for selling their models through Bedrock and Vertex. So the two different platforms you plug in your models. What's…
Just finally, as a pretty stark figure in Slock's post, there's a little graph at the bottom, which kind of otherwise maybe would have gone unnoticed. It showed that 80% of the top 1% of token spend comes from venture capital. And that sounds very similar to the ramp figures that we got in…
It means that it is effectively impossible to justify the spend right now because it means, and the thing is, I think 64% could be low. I think it could be much higher. But nevertheless, even then, so 64% of your revenue is not real. It's demand that is only made possible when someone else is…
Wow. It's interesting. Thanks for taking the time. Thanks for having me. If you enjoyed today's episode and you want to hear more of the Tech Report, please consider liking and subscribing. Also, you can get episodes of the Tech Report wherever you get your podcasts.
More from The Tech Report
