() — For nearly 15 years, Google has seemed like an unstoppable force, fueled by the strength of its online search engine and digital advertising business. But now both seem increasingly vulnerable.
This week, the Justice Department accused Google of exercising an illegal monopoly on its online advertising business and has called for the dissolution of part of it. The case comes a couple of years after the Trump administration filed a similar lawsuit against the tech giant’s dominance of search.
Google said the Justice Department is “doubling down on an erroneous argument” and that the recent lawsuit “attempts to pick winners and losers in the highly competitive ad-tech industry.” However, if successful, both cases could upend a business model that has made Google the most powerful advertising company on the Internet. It would be the biggest antitrust victory against a tech giant since the US government took on Microsoft more than 20 years ago.
But while the lawsuits strike at the heart of Google’s revenue machine, they could take years to resolve. Meanwhile, two other controversial issues are about to determine Google’s future in the potentially shorter term: the rise of generative artificial intelligence and what appears to be an accelerating decline in online search advertising’s market share. .
Just days before the Justice Department lawsuit, Google announced plans to cut 12,000 jobs amid a sharp slowdown in revenue growth, and as it works to refocus its efforts partly around artificial intelligence.
A new threat to searches
Google has long been synonymous with Internet search; it was one of the first modern technology companies whose name would become a verb. But a new threat emerged late last year when OpenAI, an artificial intelligence research company, publicly released a new viral chatbot tool called ChatGPT.
ChatGPT users have demonstrated the bot’s ability to create poetry, draft legal documents, write code, and explain complex ideas with little more than a simple question. Trained with a large amount of online data, ChatGPT can generate long answers to open-ended questions, although it is prone to some errors, or answer simple questions: “Who was the 25th president of the United States?”, which previously had to be searched in Google results.
ChatGPT relies on large amounts of data and uses it to generate answers to user questions. While the underlying technology behind ChatGPT has been around for a while, the fact that anyone can create an account and experiment with the tool has given generative AI a lot of hype and made the potential of the technology immediately understandable to millions of people. a form that was previously only abstract. Apparently, it has also led to the direction of Google to supposedly declare a “code red” situation for your search business.
“Google may be only a year or two away from total disruption. AI will take down the search engine results page, which is where they make most of their money,” tweeted last year Paul Buchheit, one of the creators of Gmail. “Even if they catch up with AI, they won’t be able to fully deploy it without destroying the most valuable part of their business.”
If more users start to rely on AI for their information needs, it is argued, it could undermine Google’s search advertising, which forms part of a $149 billion business segment in the company. Media coverage of ChatGPT has doubled down on this idea, and some outlets have pitted ChatGPT against Google. in parallel tests.
It’s not necessarily something terrible
There are some reasons to doubt that this nightmare scenario will play out for Google.
For one thing, Google operates on a very different scale. In November, the Google website received more than 86,000 million visitscompared to less than 300 million ChatGPT, according to the traffic analysis website SimilarWeb. (ChatGPT went public in late November.) On the other hand, even in a world where Google offers targeted AI-generated answers to user queries, it could still analyze queries to serve search advertising, as as it does today.
Google has its own investments in highly sophisticated artificial intelligence. One of its AI-based chat programs, LaMDA, even became a hot topic last year after a company engineer claimed it had attained sentience. (Google has disputed the claim and fired the engineer for violating company policy.)
according to reportsGoogle CEO Sundar Pichai told employees that although Google has capabilities similar to ChatGPT, the company has not yet committed to giving AI-generated search answers due to the risk of providing inaccurate information, which could be harmful. for Google in the long term.
Google’s stance highlights both its incredible influence as the most trusted search engine on the planet, as well as one of the main problems with generative AI: due to the technology’s black-box design, it’s virtually impossible to figure out how it got there. a concrete result. For many people, and for many years, the possibility of evaluating different sources of information for themselves may take precedence over the comfort of receiving a single answer.
A machine to sell advertising under pressure
All of this has come against the backdrop of what appears to be a long, multi-year decline in Google’s online advertising market share. Google’s position in digital advertising peaked in 2017 with 34.7% of the US market, according to third party estimates of the sector, and is on track to represent 28.8% this year.
Google isn’t the only advertising giant experiencing this trend. One-off factors such as the pandemic and the war in Ukraine, as well as the fear of an imminent recession, have widely affected the online advertising sector. Others, like Facebook parent Meta, have been especially susceptible to systemic changes like Apple’s app privacy updates, which restrict the amount of information advertisers can access about iOS users.
But the decline also comes at a time when Google is facing new competition in the market. Rivals like Amazon, TikTok, and even Apple have been grabbing an increasing slice of the digital advertising pie.
Whatever the cause, Google’s advertising business, which is still massive, appears to be facing increasing hurdles. And those headwinds could be exacerbated if some of the predictions about generative AI come true, or if the Justice Department lawsuits end up weakening Google’s control over digital advertising.
As part of the case, the US government asked a federal court to undo two acquisitions that allegedly helped cement a Google monopoly on advertising. Dismantling Google’s tightly integrated advertising machine will restore competition and make it harder for Google to earn monopoly profits, according to the US government.
This and other antitrust lawsuits, while threatening in their own right, only add pressure to the broader dilemma facing Google in the face of a new era of potentially tumultuous technological change.