By the end of the year, more than a billion people around the world will experience a different Google search.
New generative AI features will give users more complete and direct answers and provide a conversation overview powered by AI technology.
The transition marks an overhaul of Google’s core search product. And since many people experience the Internet through Google, these changes amount to an overhaul of the way millions use the Internet and the billions of dollars companies make from it.
Google’s transition to an AI-powered answer engine is a bulwark against an emerging AI threat.
It’s also a strategic gamble: disrupting the lucrative search ecosystem that Google has built will pay off by making way for an AI-influenced new world order.
“There are still more questions than answers about how Google’s search ad revenue will increase with the introduction of AI Overviews,” said Evelyn Mitchell-Wolf, senior analyst at eMarketer.
But rivals OpenAI and Big Tech are leading the way. They’re deploying new AI services to attack Mountain View’s search empire. If Google stands by while others make progress, it comes with its own risks.
While Google’s AI initiatives are designed to improve the way internet searches work, many sites that rely on traditional search results could suffer from a new paradigm. That includes Google’s ad-supported search business, the heart of its profitable business.
That Google has cemented itself as an everyday verb, the dominant way to tap into information on the Internet, is a testament to its staying power as a comprehensive gatekeeper.
More than two-thirds of the company’s total annual turnover comes from online advertising. And the search sector is a big part of that. Google has more than 90% of the market, dwarfing the 4% claimed by rival Microsoft (MSFT) Bing, according to data from Statcounter.
In both obvious and subtle ways, if something can’t be found through Google, it might as well not exist. Google claims default status for browsers and devices. And for most people on the Internet, searching Google is the path of least resistance; there is too much friction to look elsewhere for something.
That’s what makes Google’s shift to AI-powered search so important. “The average consumer would only adapt their search behavior to generative AI if Google rolled it out,” says Mitchell-Wolf.
Despite criticism that Google’s AI push could cannibalize existing business, executives have compared AI initiatives to other technology shifts that have led to growth and new formats and engagement for advertisers. Search is more than just a list of blue links, according to Google, and people are turning to the service with their questions, from quick checks to in-depth explorations.
“We have a deep understanding of information needs and a strong technology foundation, and we continue to think about what Search can do to serve users in new ways,” Google said in a statement.
The company is ruthlessly data-driven, so it’s likely that internal testing shows that AI summary summaries lead to different types of click-throughs and activity, and not necessarily reduced internet usage, says John Wihbey, a professor of media and technology at Northeastern University.
Early findings that Google has shared publicly suggest that AI overviews can increase engagement.
At the Google Marketing Live event on Tuesday, the company said the links in AI Overviews receive more clicks than if the page had appeared as a traditional web listing for that search query. Google also said that people who use AI summaries search more and are more satisfied with their results.
For now, at least, AI Overviews offers a refreshed version of search ads.
Following Google’s previous move to place ads at the top of search results and sell prime digital real estate, the company announced Tuesday that it will begin placing ads in a section labeled “sponsored” within its AI directory.
Rand Fishkin, the CEO of SparkToro, an audience research software company, said Google likely believes two things to be true: that they reduce the risk of disruption or competition from other AI-powered response engines by implementing their own responses; and they view the risks to their core paid advertising businesses as relatively low or even non-existent.
It may be that AI Overview features don’t negatively impact paid search volume, perhaps because they rarely interfere with the average number of clicks on paid results, he said. Or they have a positive effect on the average number of searches people perform, offsetting any decline in ad clicks.
In a less flattering light, Google’s AI efforts look like a desperate battle.
Scott Jenson, a former Google employee who left the company last month, said the AI projects he worked on were “poorly motivated and driven by the panic that it would be great as long as it had ‘AI’ in it.” In a post on LinkedIn earlier this week, he said the company’s short-sighted approach was fueled not by users’ needs, but by “a stone-cold panic that they are falling behind.”
But what some critics see as a clumsy, reactionary stance, others describe as an urgent defense.
If AI models are the next platform, similar to the transition to mobile phones and apps, Google cannot afford to miss it.
Another way to think about Google’s approach is to think back to the early days of social media and other fast-growing but now established technology platforms. Their sales pitch to the market was based on growth. At least for a while, gaining users and marking territory were more important than making money.
“Every time a consumer chooses a different search destination, it’s a missed opportunity for Google,” Mitchell-Wolf said. “If it lags behind in the AI-driven search race and consumers ultimately prefer AI-led search experiences, there will be fewer monetizable searches. How the monetization will happen is secondary to whether it can happen at all.”
Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on Twitter @hshaban.
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