Google's Three-Layer AI Monopoly

Everyone still believes the 2023 narrative: foundation models will commoditize infrastructure, infrastructure will commoditize applications, and value accrues to whoever builds the “smartest” AI. This map assumes layered competition where each level fights independently for margin.

Google proved this entire framework obsolete.

The actual 2025 reality shows a vertically integrated monopoly where Google owns all three layers simultaneously. Each layer reinforces the others. The flywheel accelerates without value leakage to partners. This isn’t competition—it’s architectural inevitability.

Google’s structure flows from bottom to top: custom chips provide economic arbitrage, proprietary behavioral data trains superior models, and billions of users across Search, YouTube, Gmail, Android, and Chrome create an irreplaceable application layer. Each interaction feeds every other layer in a closed loop.