Google Is Kodak

That was not a history lesson. It is happening right now, at a scale that dwarfs photography, to a company that makes Kodak’s foresight look negligent by comparison.

In 2017, a team at Google Research published a paper called “Attention Is All You Need.” It introduced the transformer architecture — the foundational technology behind GPT, Claude, Gemini, and every large language model that now dominates the headlines. Google didn’t just see the future of AI coming. Google built the lens.

They have the talent. They have more data than any company on Earth. They have the computational infrastructure to train models at a scale few competitors can match. They launched Gemini, invested billions, acquired DeepMind years before the current wave began. By every metric that mattered in the Kodak story — early awareness, technical capability, willingness to invest — Google is better positioned than Kodak ever was.

And they are in the exact same trap.

Google’s search advertising business is the most elegant money machine since Kodak’s film. A user types a query. Google displays results. Advertisers pay to appear among those results. The marginal cost of serving one more search is effectively zero. The revenue is recurring, almost passive, and enormous — over a hundred and seventy billion dollars a year. Every search is a tiny transaction where the user gets information and Google gets paid. The machine is so efficient that it feels like a natural law.

Now consider what an AI assistant does. A user asks a question. The AI gives the answer. There is no results page. There are no ads to display. There is no moment where the user’s attention can be auctioned to a third party. Every query that an AI answers directly is a query that never generates a click, never loads an ad, never completes the transaction that funds Google’s existence. The better the AI works, the faster it dismantles the business model that pays for it.

Google sees this clearly. They are not blind. But seeing the trap and escaping it are different things, and Kodak already proved that. The question Google cannot answer — the question no one in the industry has answered — is how you monetize a conversation the way you monetize a search results page. A subscription model generates a fraction of the revenue. A usage-based model collides with the fact that every AI interaction costs real money in compute, unlike search, where the marginal cost was nearly nothing. The economics are not just different. They are inverted.

This is not only Google’s problem. The entire AI industry is running on the assumption that scale will fix the economics — that costs will fall, efficiency will rise, and eventually the numbers will work. OpenAI is burning cash at a staggering rate. So is Anthropic. So is every company racing to build foundation models. The assumption may prove correct. It is also, for now, an assumption and not a fact, and the history of technology is littered with industries that scaled beautifully and never turned a profit.

But the deeper Kodak parallel is not about any single company’s balance sheet. It is about the convergence that nobody is correctly pricing in.

Right now, every major software company is adding an AI copilot to its existing product. Microsoft adds Copilot to Office. Adobe adds AI to Photoshop. Salesforce adds AI to its CRM. The strategy is obvious: enhance the existing product, preserve the existing subscription, defend the existing margin structure. This is the equivalent of Kodak launching a digital camera — a rational response that completely misreads the nature of the disruption.

The disruption is not “your product, but with AI assistance.” The disruption is an AI that does the task without needing your product at all. A copilot helps you write a better email in Outlook. An agent writes the email without Outlook. A copilot helps you build a better spreadsheet. An agent does the analysis without the spreadsheet. A copilot helps a consultant produce a better slide deck. An agent produces the strategic recommendation without the consultant.

Every incumbent adding a copilot to their product is defending a margin structure that may be about to cease to exist — not because the product becomes obsolete in some slow, manageable way, but because the economic structure beneath it evaporates, just as the printed photograph evaporated beneath Kodak. And just like Kodak, the companies that were born digital, the ones with no legacy to protect, will be just as vulnerable. Being native to the current paradigm is no protection when the paradigm itself is what’s disappearing.

This comparison still flatters us. Kodak lost a business. Google might lose a business. These are corporate tragedies, not civilizational ones. The reassurance forming in your mind right now — that we have been through disruptions before, that the industrial revolution also destroyed old industries and created new ones, that humanity adapts — is the most dangerous comfort of all.