Some might be old enough to remember what it was like to switch from the Yellow Pages to Google. Another quantum leap forward is just around the corner.

Alphabet, Google's parent company, does a lot of things well. Its YouTube and cloud computing are profitable businesses, and its Gmail and productivity apps are ubiquitous. There's plenty more in the works -- camera sharing, 3-D conferencing, and artificial intelligence-driven video generation were demonstrated at the company's I/O Keynote Tuesday.

But all that is peripheral to Google Search, which is still the dominant launchpad into the internet. And Alphabet intends to keep it that way--there's a reason why it's willing to pay Apple $20 billion a year to keep Google as the default search on iPhones.

AI -- as an alternative portal to the web -- is an existential threat to that dominance. Google's doing everything it can to stay ahead of the curve and avoid obsolescence. But for the first time in decades, it has serious competition from the likes of ChapGPT, DeepSeek, and others. With about 90% of global searches currently, Google has a serious chunk of market share to lose.

Even if Google wins the AI race, there's another problem -- how to monetize it. Not only is AI more expensive to run, it's also not quite as easy to sell ads if you're accessing the web through an Amazon Alexa device or a virtual reality headset. That's one reason Google pitched the "AI Ultra" subscription plan yesterday, which would give access to the most advanced AI models. At a lofty $250 a month, that could be a tough sell for consumers who are used to the internet being free.

Alphabet already trades at much lower valuation than, say, Microsoft or Tesla. It may yet win the AI war, but there's a risk that its cash cow will end up in the dustbin with an outdated six-inch thick phone book.

-- Brian Swint

***

Alphabet Unveils New Gadgets, Features Including AI Search

Alphabet CEO Sundar Pichai kicked off the Google I/O Keynote by detailing more than a dozen artificial intelligence models and research breakthroughs and over 20 AI products and features since the last I/O update, including AI mode for search and AI smart glasses.

   -- The 'AI Mode' conversational chatbot for Google's search engine is 
      available to all U.S. users. It still takes an extra step to access it 
      from the search bar, but it's a symbolic move toward AI-driven search. AI 
      start-ups ChatGPT and Perplexity have pressured Google's traditional 
      search market. 
 
   -- Pichai announced its Gemini live camera and screen-sharing feature on 
      Android and iOS, allowing users to point their cameras at an object and 
      ask questions that Gemini will answer. And Google Beam 3-D 
      videoconferencing is on the way later this year. 
 
   -- Google is working with eyeglass retailer Warby Parker to build AI-powered 
      glasses with Android XR that are intended to be worn all day. Facebook 
      parent Meta Platforms has already introduced Ray-Ban Meta Smart Glasses 
      and augmented-reality Orion glasses. 
 
   -- The next version of Google's AI video generation model, Veo 3, can also 
      generate audio, sound effects and dialogue, and is available now. A 
      clothing try-on feature coming in a few months lets shoppers upload their 
      pictures to see what the outfits they want to buy would look like. 

What's Next: Accessing Google's new models and features isn't cheap. Google's new AI Ultra subscription plan with the highest usage limits will cost $249.99 a month and include Gemini models, the Flow AI filmmaking tool, a higher usage limit Notebook LM, and 30 terabytes of storage.

-- Angela Palumbo, Tae Kim, and Janet H. Cho

***

House Lawmakers Wrestle Over Tax Bill Despite Trump Demands

Despite President Donald Trump's demand that GOP lawmakers get on board with the tax bill, far-right members and blue state Republicans are still squabbling over things like Medicaid cuts that threaten the bill's passage.

   -- House Speaker Mike Johnson can lose only three votes if all Democrats 
      stick together in opposition. GOP Freedom Caucus members want deeper cuts 
      to Medicaid than the bill proposes, while moderates from blue states want 
      a larger federal deduction for state and local taxes. Trump told the blue 
      state Republicans to drop it. 
 
   -- Rep. Mike Lawler (R, N.Y.), one of those blue state members, told 
      reporters he was "not budging," and Rep. Nick LaLota (R, N.Y.) also wants 
      changes. House leadership recently proposed raising the SALT cap to 
      $40,000, up from $30,000. Trump wants to extend his 2017 tax cuts. 
 
   -- Medicaid is a bigger sticking point. Trump, on Capitol Hill in 
      closed-door meetings to promote the bill, excoriated members (using an 
      expletive) not to tamper with the program. Instead, he instructed them to 
      focus on weeding out alleged waste, fraud, and abuse. 
 
   -- The current proposal would expand work requirements and cut federal 
      funding for Medicaid, the health insurer to more than 70 million 
      low-income and disabled Americans. The nonpartisan Congressional Budget 
      Office has said changes would save roughly $301 billion over 10 years by 
      reducing enrollees. 

What's Next: The House Rules Committee plans to advance the bill in a vote today, and Johnson aims to pass the House bill before this Memorial Day weekend. That would kick-start work on the bill in the Senate, where it is expected to change significantly before a final vote this summer.

-- Joe Light and Janet H. Cho

***

Fed Presidents Warn Don't Expect Recession or Rate Cuts

There's no U.S. recession in the forecast but no rate cut either, according to three Federal Reserve Bank presidents speaking at the Atlanta Federal Reserve's financial markets conference on Amelia Island Tuesday evening.

   -- San Francisco's Mary Daly, Cleveland's Beth Hammack and Atlanta's Raphael 
      Bostic each described a cautious approach shaped by uncertainty, not 
      urgency. 
 
   -- "We're in center position," Daly said. "My reaction function is to stay 
      in center position and be prepared to move agilely, but not abruptly or 
      quickly when we don't need to, because we don't have enough information 
      to really bring those confidence bands in." 
 
   -- "I am a person of action," Hammack said. "But right now, I think the best 
      action we can take is to sit on our hands." Bostic was more definitive. 
      "I don't have a recession in my outlook," he said. 

What's Next: The three presidents all emphasized the limits of backward-looking data and the growing importance of anecdotal intelligence. Daly and Hammack added their banks are experimenting with machine learning and textual analysis to detect sentiment shifts faster than traditional economic indicators can capture.

-- Nicole Goodkind

***

Musk Is Cutting Back Political Spending and Focused on Robotaxis

Elon Musk is back in the headlines, confirming Tesla's plans to start a robotaxi test in Austin, Texas, next month, answering yes to a Bloomberg journalist's question whether he would be at the helm of the electric-vehicle maker in five years, and announcing he would cut his political spending.

   -- Musk, who donated hundreds of millions of dollars in the 2024 election to 
      boost President Donald Trump and GOP priorities, told the Qatar Economic 
      Forum he was going to spend less for now. "I think I've done enough," he 
      said. He might step back in at some point in the future. 
 
   -- Tesla's robotaxis will start with 10 vehicles with a goal of expanding to 
      Los Angeles and San Francisco. The rollout will go slowly at first before 
      it is scaled up. Musk told CNBC he expects hundreds of thousands of 
      self-driving Tesla cars on the road by the end of 2026. 
 
   -- Musk shrugged off concerns about Tesla sales, which fell 13% in the first 
      quarter from a year ago and have shown continuing weakness, particularly 
      in Europe. The auto business has "already turned around," he told the 
      Bloomberg forum in Qatar, and they see no problem with demand. 
 
   -- Musk donated more than $270 million to back Trump last year, and created 
      controversy as Trump's advisor on slashing the federal government. He 
      spends one to two days a week in Washington, and will be having dinner 
      with Trump and meeting with cabinet officials this week, he told the 
      Qatar audience. 

What's Next: Analysts have worried that Musk's political activities have tarnished Tesla's brand appeal, something Musk also brushes off, joking with the Qatar audience that people now buy Teslas because Musk is crazy. Asked if he regretted his political endeavors, Musk said "I did what needed to be done."

-- Liz Moyer and Al Root

***

Home Prices Are Dropping But Buyers Aren't Budging, Yet

For the real estate market, the bad news is that while the number of homes listed for sale this spring has jumped, costs remain prohibitive and buyers aren't returning with the same enthusiasm. A recession could change all that by pushing prices lower in some parts of the U.S.

   -- Existing-home sales are down 2.2% through March despite a 5.5% gain in 
      the number of properties for sale, says National Association of Realtors 
      senior economist Nadia Evangelou. Sellers expect 2021's sky-high prices 
      and buyers want 2011's post-bubble deals, says eXp Realty CEO Leo Pareja. 
 
   -- Nationally, sellers cut prices on nearly one in five listings last month, 
      a larger share than any April since at least 2017, according to 
      Realtor.com. (Barron's owner News Corp owns Realtor.com operator Move.) 
      That's shifting the market to one that favors buyers. 
 
   -- During this spring's home buying season, many shoppers opted to "hang 
      tight and hold out" through market and mortgage rate fluctuations, says 

      Rick Palacios Jr., director of research at John Burns Research & 
      Consulting. Zillow expects home values to drop 1.4% this year as more 
      sellers enter than buyers. 
 
   -- While recession fears have calmed somewhat since the U.S.-China trade war 
      de-escalation, in a recession, some areas of the U.S. housing market 
      could see prices fall as much as 10%, says Ivy Zelman, co-founder of 
      housing analytics firm Zelman & Associates. Actual results depend on 
      local housing dynamics. 

What's Next: A recession could bring the opportunity buyers are waiting for. Homes nationally are overvalued by 11%, according to Fitch Ratings. Price declines would remove some of the hot air introduced during the pandemic's home-price explosion.

-- Shaina Mishkin

***

Dear Quentin,

I am in a quandary, and I hope you can help. My last surviving brother, 82, is a widower and a veteran on disability, with 70% of his expenses paid. He also inherited some stocks from his late wife. He has 2 children, including a son in his mid-50s, who moved to Atlanta when his mom got sick. We both feel he's not quite trustworthy.

His daughter is in her late 40s, has two children, 13 and 3, and lives within an hour of her dad. For about two years during her mother's illness, she would drive up nearly every weekend to help her mom by shopping, making dinners, cleaning, and tending the garden. When her mother died, she didn't come up as often. When she did, she said she was helping her dad pay bills.

About a year in, we learned all was not what it seemed. This "good daughter," during her many trips to her father, had siphoned about $70,000 from her father's accounts, using her mother's old credit card. She will not explain why she did it or what the money was for. He did not press charges of theft or elder abuse, but they no longer speak.

He has a large old house, valued at about $170,000, and many valuable antiques. I will be the executor of his estate. At first, he didn't want to give her anything. We've moved on to the son getting half and the daughter getting half, but there is $70,000 in a trust for her children for college. If they choose not to go to college, the trust will remain till they reach 21. Should she still get an inheritance?

-- Sister/Aunt

Read the Moneyist's response here.

-- Quentin Fottrell

***

-- Newsletter edited by Liz Moyer, Rupert Steiner

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

May 21, 2025 06:57 ET (10:57 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.