Tech

Google is monitoring its first serious threat in years

Photo illustration: Intelligencer

Alphabet is doing very well. Along with reporting strong first-quarter results, the company announced its first-ever shareholder dividend and $70 billion in stock buybacks. The company is now a $2 trillion company worth more than Amazon, Meta, and Saudi Aramco.

The company is a huge company with a core product that dominates its field. Google won in search more than a decade ago, and its parent company has been reaping the benefits ever since. But rather suddenly, Google is facing a real, growing, and still largely unrealized threat that could soon set Google and its parent company on a different trajectory. One is from the government. The other one is from a competitor. And the last one comes from itself.

Last week, Justice Department lawyers made closing arguments in one of two ongoing antitrust cases against the company. According to Bloomberg, the article focuses on the dominance of Google search and a specific arrangement whose details have long been kept secret.

Alphabet Inc. paid Apple Inc. $20 billion to make Google the default search engine in its Safari browser in 2022, according to newly released court documents in the Justice Department's antitrust case against Google. . A partnership between the two tech giants is at the center of a landmark lawsuit in which antitrust enforcement officials say Google illegally monopolizes the market for online search and related advertising. The Justice Department and Google will make closing arguments Thursday and Friday, with a ruling expected later this year.

The main objective of this arrangement has already been achieved. Android, the world's most widely used smartphone OS, is a Google product, and iOS feeds users to Google by default. As smartphones became more popular, Google was able to retain its iPhone users and become the default portal to the web for the majority of smartphone owners. What's being paid for now is maintenance, and Google clearly believes it's worth it. The judge overseeing the case said Google's defense was weak in some ways. From the brink:

[Apple lawyer] Schmidlein said Apple evaluated the quality of Bings compared to Google and ultimately chose Google. But then he asked why? [Judge] Mehta, will you sign such an expensive contract with Apple? Schmidlein said Apple's ability to exit the agreement each time it expires is enough to keep Google on its toes and compete.

An order barring Google from paying Apple won't necessarily prevent other small companies from participating in similar revenue-sharing arrangements, but it could be a problem for companies with antitrust paranoia. , which could undermine such arrangements. For Google, at best this would mean losing its search dominance insurance again, but the company believes it is worth a huge amount and is defending it vigorously in court. Also, there may suddenly be a significant number of competitors for the first time in a while.

Google is still figuring out how to incorporate AI-generated content into its search results. Primarily in the form of search-generated answers that drop short, cited answers at the top of the search page. It's been in public testing for a year and a half, but it recently started opening up to users who didn't sign up for the test.

While the product is getting better, I've noticed an increased tendency to skim and scroll past. At least in my experience, it's more impressive as a demonstration than an actual tool. By the standards of generative AI tools, it's pretty cautious and has been prominently displaying linked quotes in recent months. In other words, it's like a search page within a search page, with similar links presented and excerpted or rephrased in a slightly different format.

It also merges a bit with projects like Perplexity. Perplexity brands itself as an AI-powered search alternative, and similarly, what exactly does it mean to blend technologies that produce an approximation of the truth with tools that, at least nominally, aim to do so? trying to understand. It will help you get reliable information. The general trend in AI search is actually to avoid searches from redundant generated chatbot answers and towards prominent quotes and summaries. ChatGPT in 2024 is clearly more connected to the external web and external data sources than most users were when they first tried it. Other chatbot products are also starting to feel more like search engines. When Meta rolled out his AI capabilities to Facebook and Instagram, the AI capabilities appeared in the search bar. Their use is a bit like chatting, but much like searching in the case of Metas, making things even more vague, with the chatbot summarizing and quoting his Google and Bing results. We can expect more from Google on this. In an effort to build various products, AI startups (and big tech companies) are suddenly doing a tremendous amount of web crawling. In other words, they acquire many of the valuable resources needed to build something like a search engine in the process of doing other business.

We'll have a good idea whether this signals a completely new relationship with the Internet or a long detour to the same destination. A more pressing problem for Google is that these new search concepts include little or no advertising. Competing chatbots and search engines like Perplexity monetize mostly through subscriptions. Metas AI responses are very similar to search results, but without ads. Google's cautious approach to his SGE may be explained by the following tension: Building alternative search result styles in case SGE becomes popular and users decide it's better doesn't have an obvious place at the level of ads Google shows on current search pages. This is a highly productive open pit mine that is the centerpiece of a $2 trillion operation.

This may be a manageable problem for companies whose search advantage is very well protected and who have time to experiment. It's even more worrying for companies in long-term battles with the government or whose core products are beginning to show signs of age.

Whether Google Search itself is a worse product than before is an open and complex question, but the company itself says no, it's actually better. If you look at the product long-term, it's certainly much busier than it was when it was a minimalist startup, with ads, widgets, tabs, sidebars, snippets, and now chunks of synthetic text. The question of overall search quality is difficult to define, much less rigorously test, but this is probably one of the many benefits for Google of building a company around black box algorithms. Masu.

One of the things that's easy to observe is that the web that Google relies on, and that relies on Google in many ways, is in pretty bad shape. Websites that create authentic, human content that Google uses to generate the desired results are running out of ways to make money. Closed platforms have absorbed much of the written communication between individuals that Google was previously able to collect and provide. AI companies are scraping the web, and their users are sending garbage back to the web. Is Google responsible for disrupting the business models of other, much smaller businesses? Maybe. Has its dominance established a set of business incentives that centralize and distort the sprawling web? Could it be! Whatever happens, it's also a problem for Google. Because Google's search engine is trying to generate results from an ever-increasing amount of ever-worsening material. Google's long-standing dominance means that much of the web sees it as something to be fooled, manipulated, placated, and fooled. This is often a toxic dynamic, and its effects are cumulative.

This creates other challenges for Google that are unique to its position as an incumbent leader. Competitors no longer need to be better than Google to feel better, or at least comparable to Google. Maybe there are just fewer ads. It might be more convenient to have it in the chat box. If iPhone users were actually asked to choose a default search engine from a list, this is an environment where they might actually consider something else and stick with that search engine for a while.

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