AI is coming for Google’s search engine dominance. In April, Google searches on Apple’s Safari browser declined for the first time. “That has never happened in 22 years,” said Apple’s senior vice-president of services, Eddy Cue, at a recent antitrust trial involving Google. The share price of its parent, Alphabet, tumbled by more than 7% after his comments.
If that is not a telling sign, here is another: “People are starting to say: ‘I ChatGPT-ed this’, instead of: ‘I Googled this,’” said Gil Luria, an analyst at US-based financial services company DA Davidson.
In many ways, this was inevitable. Google has a 90% market share and is very profitable in an open, competitive market. “There’s only one way to go from there,” said Luria in the week that Alphabet held its AGM and announced $500m in new antitrust compliance spending.
Google is facing threats on various fronts. Competition – including from AI companies such as OpenAI and Perplexity AI – is one. Arvind Jain, an ex-Google employee who now runs Glean, an AI search startup, said these players are transforming the future of search as we know it.
Rather than asking single queries, users will soon expect their search engines to be able “go much deeper”, he said. That means having the ability to answer follow-up questions and do independent research.
At the recent Google I/O developer conference, chief executive Sundar Pichai said the company’s in-house large language model, Gemini, would be embedded in many of its search products. A new “AI mode” would drive “the total reimagining of search” at Google, said Pichai.
The company is also facing a run of antitrust cases that threaten to break up Alphabet. In a federal lawsuit brought by the US justice department (DoJ) in 2023 and heard last year, a judge argued that Google has maintained an illegal monopoly in search, centring on its exclusive agreements with companies such as Apple and Samsung.
And in a recent, separate case in April, a federal judge ruled that the company violated antitrust laws in the digital advertising market.
“The two things are linked,” said Luria. The DoJ is pushing forward with its antitrust cases because it is clear that generative AI will transform the search industry. “They realise this is the point in time where they have the ability to prevent the next market from being a monopoly,” said Luria.
Google’s stock price might have taken a hit, but Jain said the threat is overblown. “ Why does Google do a good job finding things for you? It’s because it has learned that from humans. It observes our behaviour, how we ask questions, how we define our questions, what content we choose to select and spend time on,” he said. “Having all of that data is really incredible.”
It has also indexed vast swathes of the internet that were previously inaccessible – an essential part of search. “I think people often underestimate the amount of work that has gone on behind the scenes,” Jain added.
But Luria is sceptical Google will maintain its 90% market share. The company, she said, should instead take a much more radical approach and get ahead of the antitrust cases and “actively disrupt its own business”.
The analyst argues that Alphabet should spin off its search business and focus it on AI chatbots. “ Investors will reward that. Not to mention that they’ll reward Google handsomely for spinning off the cloud business and [autonomous vehicle technology company] Waymo and YouTube and the ad network and the TPU [tensor processing units for machine-learning acceleration] business, which combined are worth more than the search business even today. They’re just not getting credit for it in the stock market.” Plus, Luria added: “I still haven’t heard somebody say: ‘I Gemini-ed this.’”
Photograh: AP Photo/Mariam Zuhaib