going forward). It now looks as though it may steal the consumer AI crown from OpenAI, maker of ChatGPT, as well. On May 19th Google unveiled a new line-up of AI agents powered by its latest Gemini 3.5 Flash model. It included AI coders to rival those offered by OpenAI and Anthropic, but also agents designed to perform various tasks for regular folk going about their daily lives. Some will appear in the Gemini app, used by 900m people every month. Others will be embedded directly in Google Search, used by more than 3bn. The company is, in sum, bringing agents to the masses. As is common in Silicon Valley, the examples executives used on stage raised plenty of eyebrows. How often would someone need an AI agent to make a slide presentation for a bouncy-castle party? Yet the tools unveiled also show promise. An agent called Gemini Spark will be able to do things such as scan emails or organise group trips even after a user has closed their laptop or put down their phone, while “information agents” in Google Search will be able to keep tabs on sports tournaments, shopping sales or the stockmarket. All this looks particularly troubling for OpenAI, which has so far led in consumer AI. Shortly after Google launched its Gemini 3 family of models in November, Sam Altman, OpenAI’s boss, issued a “Code Red” emergency to galvanise employees into speeding up improvements to ChatGPT. Since then, the focus at the lab has shifted towards its coding agent. But the release of Gemini 3.5 Flash, which Google says is four times faster than other frontier models, and the new suite of agents is likely to raise fresh questions about what OpenAI is doing with its flagship chatbot.
Investors are certainly bullish on Google’s prospects. The market value of Alphabet, its parent company, is now within a hair’s breadth of $5trn, having passed $4trn only in January (see chart). Yet Google’s success in AI is also creating problems. According to Mr Pichai, the number of tokens—Silicon Valley’s favoured measure of AI usage—consumed by its services has risen to 3.2 quadrillion a month, up from 480trn a year ago. Each token requires computing power, and therefore money, to generate, which is why Google’s capital expenditure this year will be up to $190bn, six times as much as four years ago. Moreover, that money does not go as far as it used to, because everything from chips to energy has become more expensive. Even for Google, there are limits to how much it can afford to spend. There are a few potential solutions. One is to lower the cost per token by making the technology more efficient, which Google will surely do. Another is to put limits on AI usage. Such restrictions were not announced at the event, but Gemini subscribers were alerted afterwards that they would apply, albeit with higher limits than for non-subscribers, according to Richard Windsor of Radio Free Mobile, a research firm. Usage caps may also encourage more people to pay for a subscription. A third solution is to lean more into ads. Google reckons that the greater detail in AI queries will appeal to marketers. Although it has not yet
incorporated ads into its Gemini app, it has been interspersing them into the AI responses its search service now spits out, and soon it will put AI product explainers alongside these ads. Mr Pichai noted at the conference that some companies are “already blowing through their annual token budgets—and it’s only May.” Consumers are not “tokenmaxxing” to anything like the same extent. But the more they use agents, the more providers of AI will need to come up with novel ways to make money from them. ■ To track the trends shaping commerce, industry and technology, sign up to “The Bottom Line”, our weekly subscriber-only newsletter on global business. This article was downloaded by zlibrary from https://www.economist.com//business/2026/05/20/google-is-dethroning-openai-as-the- king-of-consumer-ai
Chanel’s creative revival is paying off The world’s second-biggest luxury label is turning heads again May 21st 2026 Few figures have been as influential in shaping modern haute couture as Karl Lagerfeld, creative director of Chanel from 1983 until his death in 2019. His 36-year stint at the maison brought not only fresh designs after years of creative stagnation, but also extravagant—and occasionally bizarre —fashion shows that wowed magazine editors and wealthy shoppers alike. His long-time deputy, Virginie Viard, proved an uninspired choice as his successor. Although sales rose by half during her five-year tenure, that growth came largely through price hikes during the post-pandemic luxury boom. Fashion critics soured on the brand. Amid a wider downturn in the industry, sales at the world’s second-biggest luxury label fell by 4% in 2024, with operating profit down by 30%.
Lately, however, Chanel has been regaining its shine. On May 19th the private company, which is owned by brothers Alain and Gérard Wertheimer, reported that its sales and operating profit were up by 2% and 5%, respectively, last year. In the first quarter of this year Chanel for the first time topped a ranking of the hottest labels in fashion maintained by Lyst, an e-commerce site. Two of its wares, a pair of square-toe pumps and a chunky handbag, numbered among the ten most desirable products as measured by social-media chatter. During the most recent Lunar New Year holiday in China, analysts at Bernstein, a broker, counted a 130% increase in foot traffic at Chanel’s stores in luxury malls. Its shops in New York and London have experienced a similar upswell in visitors. For the change in Chanel’s fortunes, the Wertheimer brothers can thank Matthieu Blazy, who took over as the label’s creative director in April last year. Fashion commentators have dubbed the rapturous response to his collections “Blazymania”. His success has served as a reminder that, in the world of high-end fashion, creativity and clever marketing are as vital as ever. On April 28th Mr Blazy held his latest fashion show at the French seaside town of Biarritz, where he took house signatures such as tweed and lightened them up, sending semi-transparent suits and fringed skirts down the runway. Before the event, the company held lavish preview events for its “Very Important Clients”, the high-rollers who account for an outsize share of total sales. It also made sure that new products, including some less expensive items, would enter stores quickly to make the most of the online buzz. Mr Blazy has proven adept at refreshing the brand’s image in order to attract new customers without alienating existing clients by abandoning its hallmarks altogether. Meanwhile, lots of Chanel’s competitors continue to struggle. Many had hoped that 2026 would be the year in which spending on luxury items returned to growth. But the war in Iran has dampened consumer sentiment, not least among big-spending shoppers in the Gulf. Sales in the fashion division of LVMH, the colossus that counts Louis Vuitton, the world’s biggest luxury label, among its maisons, were down by 2% year on year in the first quarter. For Kering, which owns Gucci, they fell by 3%. The buzz
around Mr Blazy’s new designs hasn’t helped rivals. “Chanel is vacuuming most of the consumer attention,” says Luca Solca of Bernstein. Even Hermès, which had seemed immune to the luxury downturn, now looks to be under increasing pressure. Its sales in the first quarter of 2026 were up by 6% year on year, far slower than they had been growing. The brand has cultivated an air of exclusivity by limiting production of its coveted Birkin and Kelly bags, forcing shoppers to join lengthy waiting lists. But beyond the release of new colours each year, Hermès has not refreshed its core product range in decades. Now there are signs that demand may be waning. The resale price of Birkin and Kelly bags has been dropping. By contrast, demand for Chanel’s bags has been booming on second-hand markets. In the week after Mr Blazy’s first show for the brand, searches on Vestiaire Collective, a resale platform, for its signature flap bag increased by 132%. Might Chanel have found its new Lagerfeld at last? ■ To track the trends shaping commerce, industry and technology, sign up to “The Bottom Line”, our weekly subscriber-only newsletter on global business. This article was downloaded by zlibrary from https://www.economist.com//business/2026/05/19/chanels-creative-revival-is-paying- off
The strange fate of Hard Rock Cafe A Native American tribe is making big bucks from the brand May 21st 2026 When the first Hard Rock Cafe opened in 1971 in London, the musical genre to which the restaurant chain pays tribute had just begun to hit the airwaves. Over the following decades, as the ranks of head-bangers swelled, hundreds of the eateries were opened in cities around the world. Yet these days a visit to one of the restaurants feels as passé as an aged rocker performing yet another farewell tour. Patrons are treated to long- forgotten hits and underwhelming fries. Several of the restaurants are now making losses, and some are closing. Last year Chicago’s Hard Rock Cafe shut its doors after nearly 40 years. In
January the branch in Manchester, opened in 2000, also closed, joining those in Paris, Sydney and elsewhere. What is more surprising is that so many remain open. Still today there are Hard Rock Cafes selling pricey burgers and branded T-shirts in more than 50 countries. Some are run by independent franchisees, but many are operated by the company behind the brand, Hard Rock International. Against all odds, it looks to be thriving. Back in 2007 Hard Rock International, which had fallen on tough times, was purchased for just under $1bn by the Seminoles, a Native American tribe in Florida. They proceeded to build a hospitality empire across America and beyond that now encompasses 15 casinos and 36 hotels which use the brand. Visitors can play blackjack at the company’s casino in the Dominican Republic or sip cocktails at its resort in the Maldives. Such venues have become the real money-spinners for Hard Rock International, with the ubiquitous restaurants serving as a way to keep the brand alive in the minds of consumers. The launch in Florida in 2023 of an online-gambling app called Hard Rock Bet has presumably helped boost growth. It has since been rolled out in nine other American states. In 2025 Hard Rock International generated $7.9bn in revenue, estimates Forbes, up by a third from two years before. The golden age of rock and roll may be over. But don’t expect Hard Rock Cafe to disappear soon. ■ To track the trends shaping commerce, industry and technology, sign up to “The Bottom Line”, our weekly subscriber-only newsletter on global business. This article was downloaded by zlibrary from https://www.economist.com//business/2026/05/21/the-strange-fate-of-hard-rock-cafe