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Opinion

From Search to Answer Engine: Google's Evolutionary Leap

Christophe Carugati

10 May 2024

Generative AI

Google’s shift from a search to an answer engine showcases a major evolution to stay ahead of the curve. However, Google is not immune to forthcoming major disruptions from personal agents.

In the ever-evolving realm of digital information, Google’s mission to organise the world's information resonates through the online journey of billions of users worldwide. Yet, shifting user behaviours and disruptive technological innovations put Google at a pivotal crossroads: from a search to an answer engine.

 

For nearly fifteen years, Google has dominated the global search engine market, boasting a staggering 90 per cent market share, according to data from Statcounter. Its journey from a garage startup to unrivalled dominance shows its ability to innovate and adapt to change.

 

From desktops to smartphones, Google has successfully traversed the ever-changing landscape of technology, tailoring its search engines to suit users' needs across diverse devices, including tablets, virtual assistants, cars, and televisions. However, the emergence of a new generation of digital natives confronts Google with a paradigm shift in search habits.

 

The rise of social media platforms as hubs of information dissemination has heralded a new era in search behaviour, with young users increasingly turning to platforms like TikTok or Instagram to get information from personal stories from influencers about travel, food, sport, and more. According to research by the youth research firm YPulse, 46 per cent of individuals aged 18 to 24 now initiate their searches on Google, compared to 58 per cent for those aged 25-39, while 21 per cent opt for the social media TikTok.

 

In response to this shift, Google has introduced innovative features, like Google Notes and Follow, empowering users to delve deeper into their areas of interest in Google Search. Additionally, Google Android phone users can use Google Circle to Search to seamlessly search for information without leaving an application, potentially bridging the gap between search engines and social media platforms.

 

Yet, the most profound transformation lies in the very nature of search itself. With the advent of Generative AI-powered applications like ChatGPT, users are no longer content with mere search results; they crave tailored answers to their queries. To meet this growing demand, Google has unveiled its own AI-powered application, Google Search Generative Experience (SGE), into Google Search, powered by its Google Gemini models.

 

However, this transition to answer-centric search poses a fundamental challenge to Google Search's traditional business model, which relies heavily on near-zero search costs and advertising revenue from sponsored search links in Google Search and ad banners on publisher’s websites. While introducing generated answers alongside traditional search results may enhance user experience, it also threatens to disrupt Google's revenue streams.

 

Indeed, answer engines incur positive search costs due to the significant computing power required to generate answers. However, Google has managed to reduce these costs by 80 per cent in its latest version of Google SGE compared to the initial one. Moreover, direct answers often diminish the need to click on result links, potentially impacting advertising revenue. Nevertheless, Google continues to display ads alongside generated answers. While the efficacy of this monetisation strategy remains undisclosed, media reports suggest that Google is contemplating charging fees for certain AI features within Google Search.

 

Furthermore, answer engines envision a new way of interaction: AI assistants like those in the movie “Her.” They are positioned to become the killer apps and devices of the future, serving as personal agents for individuals. Social media giant Meta, boasting over 3 billion monthly active users globally, appears to be leading the charge. With its latest Meta AI assistant, users across all its platforms can access real-time information seamlessly without leaving the apps. This move by Meta could prove highly disruptive, especially considering the increasing reliance of young users on social media platforms. Microsoft is also making strides in developing personal agents, exemplified by Microsoft Copilot. Microsoft's recent hiring of most staff from InflectionAI, the creator of the conversational personal agent Pi.ai, further solidifies Microsoft's position at the forefront of this development. Despite its shift from a search to an answer engine, Google is not immune to forthcoming major disruptions.

Keywords

Generative AI

Google

About the paper

This paper is part of our GenAI and Competition Hub, which strives for responsible generative AI (GenAI) development, ensuring favourable market conditions that benefit all. We help solve your challenges through impartial, high-quality research, strategic solutions in data, AI, and competition, stakeholder engagement, insights, and policy recommendations on complex policy developments. Contact us to join the Hub or for consultation/press inquiries.

About the author

Christophe Carugati

Dr. Christophe Carugati is the founder of Digital Competition. He is a renowned and passionate expert on digital and competition issues with a strong reputation for doing impartial, high-quality research. After his PhD in law and economics on Big Data and Competition Law, he is an ex-affiliate fellow at the economic think-tank Bruegel and a lecturer in competition law and economics at Lille University.

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