For two decades, Google has been the reigning champ of search, becoming a verb used in our daily lives. Its meteoric rise from search engine to a $2 trillion company was driven by innovation, strategic acquisitions and a growing suite of products and services that have transformed the way we live and work. Google’s dominance in search has been largely uncontested, and the search world has been relatively quiet these past few years. The days of Microsoft copying Google’s search results are a distant memory.
However, OpenAI’s recent announcement of SearchGPT, and Google’s recent legal troubles, have put search back into the spotlight, setting the stage for Google’s dominance to be challenged once again.
SearchGPT
On July 25, 2024, OpenAI announced the prototype of an AI-infused search engine named SearchGPT, which aims to transform the search experience. Traditional search engines like Google typically return a page of links in response to queries. In contrast, SearchGPT provides consolidated summaries that directly address user questions. This approach allows users to bypass the process of sifting through individual links, making it easier and faster to find the information they need.
Unlike ChatGPT, which made OpenAI a household name, SearchGPT offers real time information retrieval. SearchGPT uses an advanced variant of GPT-4 which is designed to integrate real-time web data into its responses to give timely information and maintain conversational context. Context awareness can be important. If you’re looking for directions to a new restaurant, Google can guide you. On the other hand, a conversational interface will allow you to have a back and forth conversation to answer questions about menu items, parking options, weather, etc. without reading through pages. This approach could lessen users’ reliance on Google, providing a faster, more streamlined way to get answers.
Perplexity
While SearchGPT is the new kid in town, it’s worth noting that Perplexity has been offering similar functionality since its launch in 2022. Perplexity is an AI-powered search engine built on top of models like GPT-4 and Claude, and dubs itself an “answer engine.” The company hit 2 million monthly active users within four months of launching, but it hasn’t been smooth sailing for them. The company recently landed in hot water for improperly scraping websites and plagiarism, which has damaged its reputation and sparked legal challenges. Training data has been a point of contention for artificial intelligence (AI) companies since they require data to train and publishers haven’t been getting compensated for having their data used for training. To address these concerns, Perplexity launched the Perplexity Publishers’ Program, offering revenue sharing for content data. While this is a great step forward to making amends with publishers, it’s unclear if this program will generate enough revenue to keep publishers happy. OpenAI has opted for a licensing agreement with several companies to use their data for training. Sam Altman has previously expressed a preference to stay away from ads altogether.
Department of Justice lawsuit
On August 5, 2024, a federal judge ruled that Google illegally monopolized the online search market. The judge found that Google’s partnerships with Apple and Samsung to be the default search engine on their devices stifled competition. In 2021, Google spent $26.3B to remain the default search engine, which the judge deemed anticompetitive. This landmark decision could have far-reaching implications for how Google operates its search business.
Search is Google’s primary revenue driver and accounts for 56.93% of their total revenue. In 2023, Google generated $175.04 billion in revenue from search alone, dwarfing the $1.6 billion in revenue generated by OpenAI and the $35 million that Perplexity is on track to generate in 2024. However, even a small shift in market share could be substantial, given Google’s mass reach. A decrease of just a few percentage points in Google’s market share could translate into billions of dollars in lost revenue, which would be meaningful for competitors like OpenAI and Perplexity.
The penalties for Google haven’t been determined, and Google has announced its intention to appeal the decision – a process that could drag on for years. Nevertheless, this ruling could allow other entrants to grow adoption and lead to a more level playing field, which the DOJ argues is better for consumers.
One potential hurdle for AI search engines is that it’s unclear how companies will balance user experience and monetization. Incorporating ads into the process could negatively impact the user experience and potentially push users back to traditional search results, something they’ve grown accustomed to for many years now. OpenAI has partnered with Apple to bolster Apple’s AI offerings by integrating their models into Apple’s devices, giving OpenAI access to millions of Apple users, providing them with not only relevant and tailored answers to individuals. This could significantly enhance the user experience for Apple users, driving them further away from Google for getting answers.
Final thoughts
The combination of emerging AI technologies and legal challenges could threaten Google’s long-term dominance in search. ChatGPT remains one of the fastest growing applications in history, and continues to be a dominant force in the AI landscape. However, as Jeff Bezos notes, you should treat Google like a mountain – you can climb the mountain, but you can’t move it. Its dominance in search for the immediate future is far from challenged. Now that there’s some real competition, it may roll out features beyond search summaries that aim to keep users in Google. Search is complex, and Google is entrenched, which is why others like Bing or DuckDuckGo haven’t had much success.
Companies like OpenAI and Perplexity have an opening, at least for the moment, and some momentum on their side. The battle for search is far from over, but Google’s massive head start and deep pockets mean it’s well-equipped for a long, drawn-out battle.
Will AI-infused search engines reshape the search world, or will Google’s mountain remain unshaken?
“You’re asking me how a watch works. For now, let’s just keep an eye on the time.” – Alejandro, Sicario (2015)
