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I'm struggling to understand the AI business model that will eat Google's lunch. Currently Acme pays Google to list their rocket skates at the top of the search list for skates. How does AI compete? While corporations may be willing to pay for the use of AI, individuals seem less likely to do that if the alternative is free. So somehow the AI business must convince Acme that by paying for search results their results will list Acme first without mentioning the ongoing "Coyote vs Acme" liability suit. What am I missing?
Rgds,
HH/Sean

To take your example: If I ask an LLM model like Claude or OpenAI who makes the best skates, their chatbot can add a link to Acme in its response. Said chatbots will be available for "free" just like Google search (I use free ChatGPT for instance).

If people are going to start asking LLMs commercially relevant questions IN LIEU of traditional Google search, the advertisers will start moving their money to the chatbot providers. Gemini will be one of those providers but only one among many. ChatGPT as verb takes on greater significance in this world, of course.

If I use the LLM but then go to Google for my purchase-driven search, Google is in much better shape. We're basically talking about two kinds of searching, just like one might search Instagram or Youtube for one class of things(e.g., how to skate or how to apply makeup) but Google search for actually purchasing your next pair of skates.

So a critical question is whether and/or how competitors like OpenAI pull users away from Google Search. That is a question yet to be decided. One interesting study I came across by way of MBI Deep Dives tried to test the issue as follows:

https://www.semrush.com/blog/google-usage-after-ch...

Based on the data, ChatGPT adoption did not reduce Google Search usage.

This supports the expansion hypotheses, meaning people did not substitute their typical Googling with ChatGPT-ing.

In fact, there was even a slight increase in average Google Search usage after ChatGPT adoption.

Of course, the above also seems consistent with Google's last couple earnings reports, which have yet to show a real weakness in its search business.

I'm struggling to understand the AI business model that will eat Google's lunch. Currently Acme pays Google to list their rocket skates at the top of the search list for skates. How does AI compete? While corporations may be willing to pay for the use of AI, individuals seem less likely to do that if the alternative is free. So somehow the AI business must convince Acme that by paying for search results their results will list Acme first without mentioning the ongoing "Coyote vs Acme" liability suit. What am I missing?

As I understand it, the actual search results are organic, that is, the results are what Google thinks you are searching for. Ads are always labeled ads. If Google thinks you are shopping for rocket skates, there will be some vendors pop up at the top, with the results below. AFAIK, the shopping results are also organic, unless they are labeled as ads. By the way, you can make shopping results go away by clicking on "web" instead of "all" underneath the search window. But I agree, I'm starting lots more searches with AI. Perplexity now has a browser which they call an assistant, the idea of course is avoid Chrome altogether. I imagine the other AI engines have similar plans.

But the other way ads work ad placement on websites. As you browse, Google places ads it thinks you'll click on. Google gets amazing click through (I believe they actually invented click through payment), so that portion of the business is probably safe.

Interestingly, Google appears to have anticipated the AI search model where you are looking for the answer, not a webpage with the answer. Starting a few years ago, if you searched on certain items like the weather or stock tickers, Google would (and still does) display the answer above the search results.

(I believe they actually invented click through payment),

Nah, our company was doing it before Google was even incorporated : )
We even tried to put together a system that was payment not only for click-through, but for actual purchase, but the site back end payment systems were too diverse to attempt it in production, among other problems.

And I know of another company that was doing payment per click before us.
One subset of their business made the mistake of charging ONLY for clicks, not impressions at all. At least one large advertiser put up an ad that was nothing but their logo, figuring nobody would click, it would cost nothing, and they'd get a ton of brand exposure. The ad ran for AGES before their committed click count ran down.

Jim

But the other way ads work ad placement on websites. As you browse, Google places ads it thinks you'll click on.

This must be the part I'm missing. But doesn't this require that I leave all those delectable cookies on my browser? Otherwise I'm not trackable. Of course, for this to be true I would also need to have a vpn, and wipe out cookies when moving from site to site. Seems like a small price to pay for not having rocket-skate ads following me around the series of tubes.

Thanks for the explanation.

Rgds,
HH/Sean

This must be the part I'm missing. But doesn't this require that I leave all those delectable cookies on my browser? Otherwise I'm not trackable.

For the most part yes, but remember many people log into Google in apps outside of the browser for things like Gmail, documents, and Youtube. FWIW, Youtube generates significantly more revenue than Netflix.

I think I spend $40/year for email from Fastmail. It is shocking to me that people are willing to be tracked so intrusively in order to save $40. BWDIK?

Rgds,
HH/Sean

Is there any chance that you went to Carnegie-Mellon Univ. and played rugby back in the day, HH/Sean?

Carnegie-Mellon Univ.

Good school. Wish I had. I instead went to a farm in Palo Alto.

Rgds,
HH/Sean

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