Sometimes ideas arrive at the most mundane moments. This one appeared, crystal clear, while I was doing the dishes: Files will become the most important moat around the walled garden and Google is best positioned to take advantage of this.
The App Store model is old news
Up until now, app distribution has been the primary mechanism for building a walled garden. Apple is best known for this, but let’s face the facts: it has emerged as best practice from a commercial standpoint and everyone is doing it. Game studios build game launchers that bog down your PC. Microsoft is gearing up to fight Steam. With SaaS, files emerged as a new resource to build walls around. Let Google keep your spreadsheets, let Notion keep your notes, and so on. Due to how AI products are evolving, this focus will shift from trying to lock down a subset of a user’s files to locking down ALL their files.
Why? Because AI agents need transparency to deliver
The reason is straightforward: AI companies are taking over, and AI agents work better the more transparency they have. The more of your files a company can give their agentic products access to, the better those products can serve you. A personal AI that can see ALL your emails, documents, photos, and notes will always outperform one that can only see shards of your digital presence.
Right now there are two ways of collaborating with an agent beyond the primitive chat window, and both are clumsy for different reasons.
The first is to create a project and upload copies of your files (Google calls this Notebook). This means low transparency and low utility, because you’re working with copies rather than living documents. Neither AI companies nor users really want this.
The second is to let the agent work directly on your hard drive. This is genuinely good for users because it provides greater value while keeping it easy to switch between AI providers, because your files stay yours, and any agent can access them. This is precisely why every AI company has an incentive to move away from this model.
The evolution of the AI file system
The path ahead looks something like this:
- Invisible instructions embedded among hard drive files. We are here now. AI agents read your local files, guided by hidden configuration files scattered throughout your directories.
- Library of references. The files still live on your computer, but the AI creates a slimmer internal copy with only the information it needs to quickly search and operate on your behalf. The agent builds its own index of your life. Convenient, but this quietly shifts the center of gravity away from YOUR system.
- Locked-down online vault. Your files live on the AI company’s cloud. You need to ask the AI for permission to access your own data. At this stage, the walled garden is complete. You can leave, but you won’t, because leaving means abandoning the context the AI has built around everything you own. Once the cave man has moved into the city he will not move back to the cave if it means giving up electricity and running water.
Google is best positioned for this development. They already dominate cloud storage for personal files with Google Drive, and their AI products are deeply embedded into that ecosystem. Expect OpenAI and Anthropic to launch similar offerings, because owning the file layer will be the best way to own the user relationship.