You're right on the 1st 1/2. Concerning AI, it's certainly artificial, but how intelligent does it need to be to be considered AI (at least, by the general population)? People seem to be using Google Suggest to get answers to real questions (or at least entertain themselves). If a useful answer is returned, is it not "intelligence?"
I know the term is somewhat vague in it's meaning these days but I don't think many people would consider "show the most common queries with this prefix" to be AI.
Besides, it's the content not the mechanism being presented here, I guess it does support some common biases which is maybe a reason people like it.
