Google’s online dominance is showing signs of cracking in AI era

More than three years have passed since the productive AI boom, Google It defied many skeptics who thought ChatGPT would be the search giant’s death knell. But cracks are appearing in its core business.

Search engine DuckDuckGo is seeing install rates increase by up to 40% per week. Microsoft’s Bing reached 1 billion users for the first time last quarter. While Google’s search engine traffic decreased slightly last month, ChatGPT increased slightly.

Google still controls 90% of the search market, its stock price more than doubled last year, and revenue growth in the first quarter was the fastest since 2022. But AI concerns remain as more people turn to chatbots as their preferred method of tracking information. ChatGPT is consistently ranked as the best free app Apple iOS and Anthropic’s Claude currently sits in eighth place, one spot behind Google Gemini.

Meanwhile, another wave of internet users is turning away from AI-powered searches to non-AI alternatives. A Pew Research Center to work A study published in March found that nearly half of Americans feel that AI in their daily lives makes them “more worried than excited.” Surfing the web without it is a coping mechanism, and earlier this month DuckDuckGo introduced users’ default noai.duckduckgo.com.

“A lot of people use Google because it’s like the front page of the internet, but they want to go on those journeys and do their own clicking and searching and making their own decisions,” said Lily Ray, vice president of search engine optimization and AI search at marketing firm Amsive.

Google is also coming to terms with the challenge of fending off heavily funded AI startups that are paying top dollars for talent ahead of their potential initial public offerings.

Last week, Noam Shazeer, vice president of engineering and co-head of Gemini AI, announced that he was leaving Google to join OpenAI. On Friday, DeepMind vice president and chief engineering officer John Jumper said he was leaving for Anthropic.

Alphabet’s shares fell 5% on Monday, their worst day in more than a year.

Analysts at Jefferies wrote in a report that they “read the recent departures not as a sign that Google is doing less on AI, but rather as another data point in an industry-wide war for talent in which frontier labs are aggressively bidding.”

A Google spokesperson declined to comment for this story.

For Google, the emergence of generative AI represents something of an existential risk since the late 2022 launch of ChatGPT, which recently surpassed 1 billion monthly active users. The threat is that Google will both lose its dominance and, as it tries to compete on AI, cannibalize search for a new way of finding information that has no proven digital advertising model.

Advertising still accounts for about three-quarters of the company’s revenue. Sky-high margins from advertising allow Google to fund costly long-term bets like Waymo and space-based AI, while also spending close to $200 billion on AI infrastructure.

At its annual developer conference last month, Google said it would redesign the search box for the first time in 25 years, placing the “AI Mode” button directly in the box. The search button is now at the bottom of the box.

“This is the biggest upgrade to our iconic search box since its debut 25 years ago,” Elizabeth Reid, who oversees Google’s search organization, said at the event.

You can also find Google’s popular image creation tool Nano Banana in the search box when you click on the plus button. In the Google Search mobile app, a large “AI Mode” clickbox is almost the same size as the regular search box.

Google’s search engine traffic dropped by more than 1% last month. AhrefsChatGPT traffic increased slightly. DuckDuckGo, which has long positioned itself against Google as a more private search option, says its install rates are up as much as 75% from before Google’s I/O announcement in May.

Amsive’s Ray said Google “needs to strike a balance, because if they go too far with AI, they’re going to lose users.” He described DuckDuckGo’s market share as “microscopic” but said there has been a big increase recently.

Even Alphabet CEO Sundar Pichai is aware of the fears surrounding artificial intelligence. recently section On the “Hard Fork” podcast, Pichai said people are “rightfully” concerned about what kind of future technology will create, describing the scale of change as unprecedented.

Google and OpenAI have faced wrongful death lawsuits filed by family members of alleged violent and self-harming individuals over their use of chatbots. In March, the father of a 36-year-old man filed a lawsuit against Google, alleging that the Gemini chatbot convinced his son to attempt a “mass-casualty attack” and eventually commit suicide.

DuckDuckGo is not the only engine responding to the search for alternatives in the search market. Microsoft started A Bing browser extension called “Bing AI Search Selection” that gives users the option to turn off AI chat-like features.

“AI is doing powerful things for search, but research shows us that not everyone wants to use AI for everything all the time,” said Jordi Ribas, Head of Search and AI at Microsoft. wrote in a LinkedIn post about the update.

There is also growing antipathy among publishers who see traffic coming from the Google search tank; This is partly because AI pulls information into summaries at the top of results, eliminating the need to click. Google in antitrust battle with Justice Department accepted The open web was “already in rapid decline”, a court declared last year; This was a sentiment at odds with public comments from company executives.

Studies data panels Research from the likes of SparkToro and Similarweb shows that roughly 68% of all Google searches now result without a single click to an external website. Condé Nast CEO Roger Lynch said in an interview last month. TBPNHe said his team had been predicting a decline in search traffic for three years, and “every year there has been a greater decline than we anticipated.”

“Last year I told our crews they just assumed no calls were made,” he said. “You should plan your business as if search were zero.”

Even after Google’s decline on Monday, the stock is still up more than 100% in the past year, outperforming all of its hyperscaler peers. The company has demonstrated its ability to survive and thrive through massive platform changes, most notably the move from the web to smartphones, and has proven to be a major player in the generative AI space despite a slow start.

On the recent earnings call, Pichai attributed the increased user engagement to AI experiences such as AI Mode and AI Overviews, which are his main areas of investment.

“AI continues to drive search usage, and queries are at an all-time high,” Pichai said in the call.

However, Google automatically enables AI Overview; This means, in the words of DuckDuckGo policy chief Kamyl Bazbaz, users are “given no choice.”

Reid, Google’s search leader, said on the Bloomberg podcast: April “There’s kind of a myth that people want artificial intelligence or the internet.”

“I actually think we’re seeing people want AI together on the internet,” he said.

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