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

More than three years into the generative artificial intelligence boom, Google has defied the many skeptics who thought ChatGPT would be the search giant’s death knell. But cracks are forming in its core business.

Search engine DuckDuckGo is seeing install rates jump by up to 40% a week. Microsoft’s Bing reached 1 billion users for the first time last quarter. And Google’s search engine traffic is down slightly over the past month, while ChatGPT is up a tick.

Google still controls 90% of the search market, its stock price has more than doubled in the past year and revenue growth in the first quarter was the fastest for any period since 2022. But the AI concern persists as more people turn to chatbots as their preferred method to track down information. ChatGPT consistently ranks as the top free app on Apple iOS, and Anthropic’s Claude is currently eighth, one spot behind Google Gemini.

Meanwhile, another wave of internet users is turning away from AI-powered search altogether in favor of non-AI alternatives. A Pew Research Center study published in March found that about half of Americans felt that AI in their daily lives made them “more concerned than excited.” Navigating the internet without it is one coping mechanism and, earlier this month, DuckDuckGo made a “no-AI” search engine with the launch of new browser extensions that allow users to default to noai.duckduckgo.com.

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

Google is also reckoning with the challenge of fending off heavily funded AI upstarts that are paying top dollar for talent ahead of their prospective initial public offerings.

Last week, Noam Shazeer, a vice president of engineering and co-lead of Gemini AI, announced he was leaving Google to join OpenAI. And on Friday, John Jumper, DeepMind vice president and engineering fellow, said he was leaving for Anthropic.

Alphabet’s stock on Monday had its worst day in more than a year, dropping 5%.

Analysts at Jefferies wrote in a report that they “don’t read the recent departures as a signal that Google is doing less with 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 has represented an existential risk of sorts since the launch in late 2022 of ChatGPT, which recently surpassed 1 billion monthly active users. The threat is both that Google loses its dominance and that, in trying to compete in AI, it cannibalizes search in favor of a new way of finding information that doesn’t have a proven digital ad model.

Ads still account for about three-quarters of the company’s revenue. The 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 be redesigning the search box for the first time in 25 years, placing the “AI Mode” button directly in the box. The search button is now below the box.

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

Additionally, Google’s popular image generation tool Nano Banana is also available in the search box by clicking on the plus button. In the Google Search mobile app, a large “AI Mode” click box is nearly the same size as the regular search box.

Over the past month, Google’s search engine traffic is down more than 1%, according to Ahrefs, while ChatGPT traffic is up a bit. DuckDuckGo, which has long positioned itself against Google as a more private search option, says install rates have been up as much as 75% from before Google’s I/O announcement in May.

Google has “to strike a balance, because if they go too far with AI, they’re going to lose their users,” said Amsive’s Ray. She called DuckDuckGo’s market share “microscopic,” but said there’s been a big uptick of late.

Even Alphabet CEO Sundar Pichai recognizes the fears surrounding AI. On a recent episode of the “Hard Fork” podcast, Pichai said people are “rightfully” anxious about what sort of future the technology will create, calling the scale of change unprecedented.

Google and OpenAI have both faced wrongful death lawsuits filed by family members of those who allegedly committed violence and self-harm due to their use of chatbots. In March, Google was sued by a 36-year-old man’s father, who alleged that the Gemini chatbot convinced his son to attempt a “a mass casualty attack” and to eventually commit suicide.

In the search market, DuckDuckGo isn’t the only engine responding to a desire for alternatives. Microsoft launched a Bing browser extension called “Bing AI Search Choice,” giving users the option to turn off AI chat-like features.

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

There’s also growing antipathy among publishers that have seen traffic from Google searches tank in part because AI is pulling information into summaries at the top of results, eliminating the need to click through. In an antitrust battle with the Justice Department, Google admitted last year in a court filing that the open web is “already in rapid decline,” a sentiment that stood in contrast to public comments from company executives.

Studies from data panels like SparkToro and Similarweb show that roughly 68% of all Google searches now end without a single click to an external website. Condé Nast CEO Roger Lynch, in an interview last month with TBPN, said his team has predicted declines in search traffic for three years, and “every year it was down more than we forecast.”

“Last year, I told our teams assume there’s no search,” he said. “You have to have your businesses plan as if search is zero.”

Even after Google’s slide on Monday, the stock is still up more than 100% in the past year, well outperforming all of its hyperscaler peers. The company has shown an 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 generative AI despite a slow start.

On the last earnings call, Pichai attributed increased user engagement to AI experiences like AI Mode and AI Overviews, which are major areas of investment.

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

However, Google turns on AI Overview automatically, meaning, in the words of DuckDuckGo policy chief Kamyl Bazbaz, users are not “given a choice.”

Reid, Google’s search leader, said in a Bloomberg podcast in April that “there’s this sort of myth that people want AI or the web.”

“I actually think what we see is that people want AI on the web together,” she said.

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