What do you mean? They also have sth like ChatGPT, called Lambda, and that was quite some time before ChatGPT was released. They basically have all the fancy large language model things as well. They are always at the state of the art and usually way beyond internally.
The bigger problem is, how to make this into a product. A product where you can show ads. A product which will not create all kinds of hate.
Throwaway for obvious reasons, but can confirm. I don't even work on the AI / search team and I remember trying Meena (-> Lamda) at least 2 years ago and being completely blown away by its ability to hold a conversation. There were even jokes on Memegen that we could let Meena write our perf packets and it'd be indistinguishable from real ones. I guess that's the Google-internal Turing test.
The bigger problem is, how to make this into a product. A product where you can show ads. A product which will not create all kinds of hate.