It is still sort of amazing to say but Google may be in trouble.

​We have argued before that the FANG investing acronym (really any variation thereof) was a) dead b) good riddance and c) to be very careful hoping it might come back any time soon.

It is very difficult to see how adopting the old approach of simply investing in the biggest and most dominant companies over the entire market would be wise in this market.

But even we will admit it was hard to really understand how, of all the companies, the "G" of Google would really, truly struggle. But that is how the churn of capitalism works. Titans are laid low all the time. Now it could be Google's turn.

For years all of this seemed very unlikely. Google was cool. It was popular. It had a very cuddly image and, perhaps more than anything else, it made a lot of money.

That combination was very impressive. There are firms that capture the public imagination (like Apple), firms that are cuddly (like Patagonia) and firms that make a lot of money (like Exxon) but very rarely firms that are able to combine all three.

This made Google a perennial investor darling and its ability to have awesome power and reach without really any criticism was - until very recently - one of the most novel aspects of one of the most unique companies since their invention going all the way back to the Dutch Golden Age.

It is early days but it seems that this has all changed now. Suddenly Google hasn't just fallen out of favor on Wall Street but it is also under fire from all sides.

A brief list of its challenges at present might include:

• ​They are currently under investigation by the Justice Department for "abusing a monopoly" in the online ad market. ​

• ​Congress actually has a bipartisan bill (!!) which is under siege from Google lobbyists but apparently has a small chance of surviving and would effectively break the company up.

• As we have noted previously, Goo​gle are experiencing the decline of their ad business where they make the majority of their money. They still make a lot! But a decline is still a decline.

• Oh and they have let significant numbers of people go for the first time in, well, really ever.

On the decline of the ad business we got more info on that subject this week. In the third quarter of 2022 core operating margins in the core Google Services segment which includes search fell 7%. On Thursday, on Alphabet/Google earnings call we found out that it had fallen another 3%.

It is incredible how often this happens. Companies can go years without serious problems and then suddenly they have so many fires to fight that they can seem both under-siege and unable to successfully solve one problem because others overlap.

Boeing is one we discussed a lot in these pages. Deutsche Bank is another. General Electric might be a third.

In Google's case, their core structural market - online ads - is struggling right as regulators try to break up that business. How can you improve (and therefore invest in) a business when that very enterprise might be broken up, disrupted or damaged by the government?

But that isn't all.

The sense of a siege hurts morale and the brand and suddenly that may also matter because all of a sudden Google may have a real fight on its hands for the first time since they dethroned Yahoo.

This is because two additional obstacles have risen to challenge a company that defined the lazy "can't fail" attitude around the FANG acronym that we have written about before.

It never fails, just as the company would love a few quarters or even years to regroup and pull themselves together as they streamline, re-organize and re-commit themselves to the values that helped make their name originally.

1. The first is that they suddenly have real competition in their core search bar product that generates the vast bulk of their revenues via ad sales. That is both new AND a huge shock.

2. The second, much less discussed, is that regardless of whether Google gets properly disrupted is just whether the cost of search type functions - Chatbots, search bars, what have you - will rise significantly.

The first takes the form of OpenAI's already famous ChatGPT service that effectively removes the new "to Google" anything. Rather than Googling and scrolling to find the link that might serve now you have an AI enabled servant that can not just find you the information you need but serves it up

ChatGPT has taken the world by storm but perhaps more concerning for Google has been Open AI's deepening partnership with Microsoft. This has raised the possibility of ChatGPT integrating with Microsoft's products and the previously unthinkable possibility that people might want to use (shudder) Bing, Microsoft's search product.

We take both of these threats pretty seriously for no other reason than the fact that the Google top brass are doing so.

There are wide reports that Google's leadership are panicking or "freaking out." Kinder and perhaps more sympathetic journalists speak of a "code red" and the AI chat wars breaking out as Google begins furiously rolling out new products and capabilities to try and head off ChatGPT cannibalizing their business.

But we wonder whether it isn't the second issue that, over time, will be the real challenge for Google?

It is early days and while ChatGPT is very cool it also has real limitations, not least just how Microsoft will integrate it into its products and just as critically, how it will make money from it. That is always, always the rub.

Those questions don't tend to get a lot of attention when something new and cool and very popular hits the ground running but making money is important. This is something many Twitter investors have found out over the years and Elon Musk is finding out now as he desperately tries to shill for some SuperBowl ads.​

But the real tension might be the cost of "AI-enabled chat wars." It is difficult to put a true cost around a technology that is in its very infancy but the computing costs, the talent required to build these products and, most of all perhaps, the hardware needed to make these products available to the whole online world - something that is

In earlier editions, we have argued for the end of FANG and the end of cheap money (and therefore subsidized cheap products) but could we have also reached the end of cheap search?

And with it, if Google has to spend far more of their revenues on their products just like all the other companies throughout time, then have we seen the end of "just buy Google" as well?

Google is hardly at risk of failure or bankruptcy but perhaps its biggest single challenge is avoiding becoming just another large company (a "JALC") as it searches for meaning, morale and to avoid the regulatory morass this decade.

Its stock has started 2023 very well but for the reason there we will have to turn to.....

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