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Google Search is an aggregator. It has a great dinner table where merchants and advertisers want a nice seat. They pay money, bidding in a digital auction, so that Google can give them a prominent position. Simply, when users come to Google and search for something of interest, sometimes, Google will show them links already paid for, and souped by the advertisers and merchants. When users click those links, Google makes money!
This symbiotic relationship has existed since Google invented its algorithm. But over the next few quarters, the business model must evolve.
Recall that when a merchant or an owner of a website hires a Search Engine Optimization Engineer, that person is doing everything to make it easier for Google to discover the merchant’s website. In other words, it works to make Google’s business model easier since it needs to find those websites (the raw materials) for it to create value for users or web surfers. The merchant of course celebrates because when many people discover and find it, it can make sales and grow its mission.
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Google can afford to allow surfers to use its search products for free because those clicks pay the bills. But today, with the rise of ChatGPT, and a possible Google response, named Bard, the old business model may be expiring.
The New Playbook
When users type something of interest on Google, Google will show links where they can find that information. But for ChatGPT, it does not show links, rather, it parses data from the web, and gives a decent summary. Simply, ChatGPT serves the meal while Google sends users to go grocery shopping. That grocery shopping means you have to buy the items, and then come and make the food for the meal. How many people want to go grocery shopping when there is a ready-made meal, which can match on quality and value, what the personally cooked meal will produce? Not many!
This is where it gets interesting: if Google’s Bard follows ChatGPT and provides summaries with no links, Google will be unable to make money via links. So, what would be the option to make money? Subscription.
In other words, the future of Google Search business model will be anchored on subscription. ChatGPT Plus has already alerted the world that very soon, that “free” knowledge has to be paid for. I expect Google to launch Google Bard+ which we have to pay for when the sponsored links are made to “disappear” a little more.
Of course, Google can also just expand its search result and also add links, making it possible that it can provide great summaries to users while also offering the ability to sell links, to sustain its business model. But over time, we can have that as a subscription baked into other Google products which people already pay for.
The Challenge from Microsoft
Google has to fight this battle vigorously since Microsoft is working to revamp Bing with a new DNA coming from ChatGPT.
Microsoft has significantly upped the stakes in the tech world’s ongoing race to reinvent and reinvigorate internet search engines with AI technology. The company announced Tuesday that it is integrating OpenAI’s next generation large language model into its search engine Bing, a version that is even more powerful than ChatGPT, which has captivated the internet since it was launched 10 weeks ago. The parent company of LinkedIn developed a proprietary way of working with the next-gen tech, calling its new model Prometheus.
Microsoft will also launch a new version of its Edge browser, which will incorporate the new AI features into its sidebar. Google unveiled Bard, its own AI chatbot, on Monday.
[…]
“AI will fundamentally change every software category, starting with the largest category of all – search,” said Satya Nadella, Chairman and CEO, Microsoft. “Today, we’re launching Bing and Edge powered by AI copilot and chat, to help people get more from search and the web.”
A LinkedIn user provided a summary of the Microsoft event as follows:
?Satya acknowledged, “the race is on”
?Bing will still link to web results and aim to drive traffic to websites
?Microsoft says the freshness of results is going to be shocking
?Bing will have an expanded search box for up to 1,000 characters
?No clear answer about how much it costs to run a query in search vs. AI chatbot
?No extra cost for users, the AI features are free
?Bing aims to fact-check AI answers with search results
?Apparently, Bing also uses Prometheus (a next-gen LLM) for its search algorithm and claims relevance has gone through the roof
?”40% of the time, people click on search links and click back immediately”
?Ads will remain in search results
?Edge will be able to read and summarize PDFs you open with the browser
?Microsoft plans to integrate with all browsers – will Chrome open it up or use Google’s model?
All Together
Google Search is an aggregator, orchestrating relationships between users and merchants. This symbiotic relationship has existed since Google invented its algorithm. But over the next few quarters, the business model must evolve. In this piece with an accompanying video, I explain that over time, we will expect Google to offer search via subscription, bundled with other Google products, for its best search+ product. It is very clear: if Google provides the answers and people do not need to click links a lot (the revenue source), subscription becomes an option to protect revenue.
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The main task for Google is keeping its user base intact, if it can do that, it will continue to make money. For users to know about what merchants and advertisers are selling, it must be seen somewhere, Google has many of the viewing centres.
I think you forgot one thing.
Google wealth relies on the concept of one stop shopping.
If Google is able to attract commercial queries which display paid links, it is because it also provides relevant resultats for non commercial requests.
If Google asks its users to pay for non commercial requests via Bard, it will loose users that will not come back for commercial queries.
But you can imagine that if the same way Google introduced paid links after 3 years of operation in 2001, it creates paid answers in its chatbot. Don’t forget that all chatbots platforms except ChatGPT are able to show links, product images and even buy button. Even low tech Manychat can do it.
Why would Google not be able to integrate links in Bard answers if a dwarf like Manychat offers this option ?
Besides, you forget that there are (at least) three kinds of search queries
1/ Navigationnal: you look for “Walmart” because you want a link to go to Walmart.com. You will click once, what ever the chatbot tells you.
2/ Informational how old is Joe Biden ? You don’t need to click
3/ Commercial: beautiful red shoes: you want to click at least 5 times as you want to get inspired. This is why, as you mention “”40% of the time, people click on search links and click back immediately”
Even if Google integrates Bard in search results, for many queries, people want to click.