Big Question #1: What Does ChatGPT Mean for Google’s Business?

One of the things you quickly realize, if you’ve tried your hands on ChatGPT, is how efficient it is at generating clear responses to your prompts, some of them incorrect despite its confident tone. ChatGPT is a conversational-artificial-intelligence chatbot developed by OpenAI. It has the uncanny ability to understand and respond to natural language input in a way that is almost indistinguishable from a human. As a tool with multiple use cases, one of its strongest fits is as a search engine, a new doorway into our digital world that forces us to ask: what is the fate of Google's search business?

This article is my attempt at answering that question. While I’m not an expert in artificial intelligence, my identity as a digital media professional mandates me to think through the impact of ChatGPT across the board. I have explored the tool and am certain it’ll transform several parts of our lives. We should all consider how that would happen and what it means for our future.

Over the coming weeks, I’ll publish my thoughts on what ChatGPT means for us writers and creatives, our educational systems, communities like Quora and Reddit, fake news, and more. Stay with me on this one.

What does ChatGPT mean for Google’s Business?

First, it could mean less revenue for Google.?

Google Search is big business. Not only does it impact the way we discover our world on the internet, but it’s a major source of income for its parent company, Alphabet, accounting for 57.2% of its $69.1 billion revenue in Q3 2022 alone. The company operates with an ad-revenue business model. Brands run ads to reach more clients, and Google makes bank according to the ad type offered. This model has worked well so far. It’s helped businesses to reach customers at scale and left Google with a market share of over 84%. However, Google isn’t the most efficient search tool for end users.?

You know how it is when you enter a query on Google. You’re met with results too numerous to dig through, most of which are designed to convert you into a paying client. It’s no wonder that more people are using TikTok for search and turning to communities like Reddit for experiential answers.?

One major difference between Google Search and ChatGPT is that the latter offers a more direct response to your question. Ask it the difference between a dog and a hare, and you get this:

Ask Google the same question, and this is what you get:

ChatGPT provides clear answers to queries, and that’s a potential threat to Google’s business model. Human beings are creatures of comfort. We’d choose the least effortful option over one that requires minutes, if not hours, of labour. Sure, ChatGPT doesn’t always deliver accurate results, but it lessens ambiguity and feeds into our desire for convenience. Also, OpenAI is working on WebGPT, an updated model aimed at improving accuracy and providing citations. This version — alongside Microsoft’s potential incorporation of ChatGPT into Bing — could result in a more efficient search tool that slashes the number of Google’s users, leading to fewer businesses running ads and, ultimately, less revenue for the company.?

But the adoption of ChatGPT also provides an opportunity for Google to review its business model and strengthen search output.?

As Amr Awadallah — formerly of Google and CEO of Vectara — noted in a New York Times report, “Google has a business model issue. If it gives you the perfect answer to each query, you won’t click on any ads.”

Although professionals like writers and researchers understand the maze that is Google’s search output, the wide (and rapid!) adoption of ChatGPT signifies that people want a better window into the internet. Having a search tool that provides a direct response is like wishing for a cake and having it immediately. It saves time and feels good.?

Google is threatened, not only by OpenAI and Microsoft’s potential makeovers but by consumer behaviour and the coming technological advancement in the sector. The company has an opportunity to overhaul or redesign its product in a way that best serves users. And that might already be underway as a report by Business Insider confirms that Google is building AI prototypes and products to address ChatGPT’s threat to their business.?

In addition to the potential impact on Google's business model, ChatGPT also raises important questions about the future of search in general, both for users and the industry. As users become more accustomed to receiving quick and accurate responses, they may begin to expect similar performance from other search engines. This could lead to increased competition in the search market, as other companies work to improve their search algorithms and integrate AI technology to meet the demands of users.

If Google doesn’t survive these changes, it could evolve into a backbone for other search products. AI language models are designed to assist users with generating human-like text, but they can’t search the internet or provide information in the same way that search engines do. Google uses complex algorithms to comb through billions of web pages for the required results. Still, we’ve seen that AI technology has the potential to enhance different products and services. With tools like Waldo and Perplexity AI already in the market, we might see more products integrating AI with existing search engines to provide better-defined search outputs.

In the end, the impact of ChatGPT on Google's business and the overall search industry is still very uncertain. I expect Google to tweak its search product but also invest further in the success of YouTube as a search engine, especially with younger audiences becoming interested in visual search results. In any case, it's clear that the rise of chatbots and conversational interfaces is set to change the way we interact with the internet moving forward.

Insight from Experts?

• Parmy Olson ’s piece on this topic for Bloomberg, and on Microsoft’s Bing on The Washington Post.?
• Nico Grant and Cade Metz ’ report in The New York Times.
• Hasan Chowdhury’s exploration of Microsoft's investment into ChatGPT in Business Insider.