Google has been losing margin (hence profitability) in its search advertising business that powers everything it does fairly rapidly over the last 6 years. They have kept revenue/cash flow going/improving over that same period by putting more and more ads on their properties, dumping things which aren't making money, and trying really hard to push many of the moonshot projects into profitability. During the same 6 years Microsoft has been reporting growing margins on its search advertising business and Bing became profitable for the first time not too long ago.
The issue for Google is that while their search is good, Microsoft has crossed over into the "good enough" space (for the customers, advertisers) and the product (people using the service) are less and less likely to force switch the search engine default to Google. Worse, the back stop efforts that Google has been doing to protect revenue growth have caused many long time users to become dissatisfied with their user experience. Google's portal portfolio (News, Finance, G+, Pictures, and Blogger) and cloud offering (GCE) have not kept up with other offerings in the space they are losing share.
All of that summarizes to "web services are becoming commodities" and while profitable (as Bing has demonstrated) it's not going to continue to be profitable enough for Google to do that and any of the other projects that 90% of the other employees work on.
So first Google will start reporting down quarters because no matter how many ads they cram on a page it doesn't improve their RPM, then start cutting projects internally left and right to cut costs, and then they start cutting more of the benefits, and then they start downsizing groups to stay within the 'profitable' envelope, and like a main sequence star that has run out of hydrogen to burn, the collapse to white dwarf has begun. What Alphabet does at that point will be interesting, but their margins on the G business will only be sufficient to support the G business and not anything else. If they aren't making any money elsewhere then poof.
So when? Can't say, really it depends on them being able to pull out into a sustainable business model on the lower margins of commoditized search. Google seems to understand the threat to the business (given their moves, like Alphabet, changing CFOs Etc.). And they are really smart so if there is a way out they may be able to find it, and they have enough cash to "coast" for a long time (look how long Yahoo has coasted right?) But a lot of these things end up being additive, the shine goes off of working there, a lot of solid people leave and then you can lose the ability to change fast enough to avoid your fate.
Companies that pull it off (re-inventing themselves) are much rarer than companies that auger into the ground.
> Google has been losing margin (hence profitability) in its search advertising business that powers everything it does fairly rapidly over the last 6 years. They have kept revenue/cash flow going/improving over that same period by putting more and more ads on their properties, dumping things which aren't making money, and trying really hard to push many of the moonshot projects into profitability.
Google is trying to pull off a Saudi Arabia: make as much profit as they can and pour said profits into R&D (tourism) so that when the time comes and people are not interested as much as now in AdWords (oil), the "moonshot" investments will have unlocked new sectors where profit can be made.
