The sting is in the tail.
From the Wall Street Journal via MSN, November 29:
If Google were a ship, it would be the Titanic in the hours before it struck an iceberg—riding high, supposedly unsinkable, and about to encounter a force of nature that could make its name synonymous with catastrophe.
The trends moving against Google are so numerous and interrelated that the Justice Department’s attempt to dismantle the company—the specifics of which were unveiled Nov. 20—could be the least of its problems.
The company’s core business is under siege. People are increasingly getting answers from artificial intelligence. Younger generations are using other platforms to gather information. And the quality of the results delivered by its search engine is deteriorating as the web is flooded with AI-generated content. Taken together, these forces could lead to long-term decline in Google search traffic, and the outsize profits generated from it, which prop up its parent company Alphabet’s money-losing bets on things like its Waymo self-driving unit.
The first danger facing Google is clear and present: When people want to search for information or go shopping on the internet, they are shifting to Google’s competitors, and advertising dollars are following them. In 2025, eMarketer projects, Google’s share of the U.S. search-advertising market will fall below 50% for the first time since the company began tracking it.
In responding to government antitrust inquiries, Google itself makes this point often: “Evidence at trial shows we face fierce competition from a broad range of competitors.”
This shift is due largely to users’ bypassing Google to start their search for goods on Amazon. It’s handing Amazon billions in advertiser dollars. Meanwhile, TikTok has less than 4% of U.S. digital ad revenue, but significant potential to expand its share of the pie. A recent TikTok pitch to advertisers reported on by The Wall Street Journal said that 23% of its users searched for something within 30 seconds of opening the app, and its global search volume was three billion a day.
The second threat is the rise of “answer engines” like Perplexity which, well, do what they say on the tin. OpenAI has added internet search to ChatGPT, Meta Platforms is exploring building its own search engine, and even AI chatbots that can’t search the internet are proving increasingly capable at addressing many questions. They’re also becoming ever more widespread, as Microsoft and Apple integrate them directly into the operating systems of all the devices they make or support.
“Google had this seemingly insurmountable position in search, until AI came around, and now AI is to search what e-commerce was to Walmart,” says Melissa Schilling, a professor of management at New York University’s Stern School of Business. Another comparable moment was when Microsoft missed the importance of the smartphone, and the iPhone upended its dominance of consumer computing, she adds.
Of course, Google is hard at work trying to make sure that if anyone is going to disrupt the search paradigm with AI, it’s Google itself. Earlier this year, Google rolled out AI summaries of its own search results to all users in the U.S. The company has said that such innovation is in direct response to intense competition from AI at both startups and tech giants.
The third trend that threatens Google is one the company may not be able to do much about, and that makes it the most dangerous—the degradation of the overall ecosystem of websites that Google has shaped, and on which it depends.
Much has been said about how search results are declining overall, no matter how we search the web, because of the proliferation of AI-generated content. Absent any other trends, this would by itself be a huge problem for Google. But the company’s response—eliminating the need to click on links at all by offering AI-generated summaries—could accelerate the decline of the web.
The reason is that the internet is an ecosystem, with Google as one of the primary providers of traffic—and therefore revenue. Without the traffic that Google sends across the web, the incentive and resources to continue producing websites attractive to Google’s search algorithm will decline.
Joerg Klueckmann, head of marketing at European fintech giant Finastra, worries about just that. Once more people are relying on AI to answer questions as much as early adopters like him are, traffic to websites will dry up. “And then, what do you do with your search-engine marketing team? What does that mean for all the websites we have out there?”
This process has already begun. While Google reported strong revenue growth last quarter, the rate at which people clicked on ads that appear in search results was down 8% compared with a year ago, according to data from advertising platform Skai. It’s not clear why this is happening, but one logical conclusion is that it’s the result of Google’s own AI-based summaries, which eliminate the need to click on sponsored links or scroll down to where the ads are.
One study from January by search-engine-optimization software company Authoritas found that Google’s AI answers in its search results could upend rankings and traffic to existing websites. And ad sales firm Raptive has projected that the full rollout of this change to search could erase $2 billion in revenue for publishers....
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