Google’s internet dominance is showing signs of cracking in the AI ​​age

More than three years into the generative intelligence boom, Google he defied many skeptics who thought ChatGPT would become a search giant. But cracks are forming in its core business.

Search engine DuckDuckGo sees install rates increase by up to 40% per week. Microsoft Bing reached 1 billion users for the first time last quarter. And Google search engine traffic has decreased slightly in the past month, while ChatGPT is up.

Google still controls 90% of the search market, its stock price has doubled in the past year and its revenue growth in the first quarter was the fastest of any period since 2022. But AI concerns persist as more people turn to chatbots as their preferred method of tracking information. ChatGPT is consistently ranked as a top free app an apple iOS, and Anthropic’s Claude is currently eighth, one place behind Google Gemini.

Meanwhile, another wave of internet users is turning away from AI-powered search altogether in favor of non-AI alternatives. A Pew Research Center study published in March found that nearly half of Americans feel that AI in their daily lives has made them “more anxious than happy.” Surfing the Internet without it is one way to deal with the situation and, earlier this month, DuckDuckGo made its search engine “with AI” by introducing new browser extensions that allow users to redirect themselves to noai.duckduckgo.com.

“A lot of people use Google because Google is like the first page of the Internet, but they want to go through this journey and click and search and make their own decisions,” said Lily Ray, vice president of search engine optimization and search AI at marketing firm Amsive.

Google also faces the challenge of securing highly paid AIs that pay top dollar for talent before their initial public offerings.

Last week, Noam Shazeer, vice president of engineering and director of Gemini AI, announced that he was leaving Google to join OpenAI. And on Friday, John Jumper, DeepMind’s vice president and engineering partner, said he was leaving Anthropic.

Alphabet stock on Monday had its worst day in more than a year, falling 5%.

Jefferies analysts wrote in the report that they “read the latest move as a sign that Google is doing less with AI, but as another data point in the talent industry battle where frontier labs are aggressively bidding.”

A Google spokesperson declined to comment on the matter.

For Google, the emergence of artificial AI represents an existential threat of sorts since the launch in late 2022 of ChatGPT, which recently surpassed 1 billion monthly active users. The threat is both that Google loses its dominance and that, in trying to compete in AI, it eats away at people searching in favor of a new way of finding information that does not have a proven digital advertising model.

Ads still account for about a third of the company’s revenue. High margins from ads allow Google to fund long-term bets like Waymo and space-based AI while spending nearly $200 billion on AI infrastructure.

At its annual developer conference last month, Google said it would redesign the search box for the first time in 25 years, placing an “AI Mode” button directly on the box. The search button is now below the box.

“This is the biggest improvement to our popular search box since it first appeared 25 years ago,” said Elizabeth Reid, head of Google’s search organization, at the event.

In addition, Google’s popular photo editing tool Nano Banana is also available in the search box by clicking the plus button. In the Google Search mobile app, the big “AI Mode” click box is almost the size of a regular search box.

In the past month, Google’s search engine traffic has dropped more than 1%. ChatGPT traffic has increased slightly. DuckDuckGo, which has long positioned itself against Google as a private search option, says install rates are up nearly 75% ahead of the Google I/O announcement in May.

Google has to “balance, because if it goes too far with AI, it will lose its users,” Amsive’s Ray said. He called DuckDuckGo’s market share “microscopic,” but said there has been a significant increase since then.

Even Alphabet CEO Sundar Pichai recognizes the fear surrounding AI. In a recent episode of the “Hard Fork” podcast, Photosi said people are “rightly concerned” about what kind of future technology will create, calling for an unprecedented level of change.

Google and OpenAI have both faced wrongful death lawsuits filed by family members of those who allegedly committed violence and self-harm because of their use of chatbots. In March, Google was sued by the father of a 36-year-old man, who alleged that the Gemini chatbot convinced his son to attempt a “massive attack” and ultimately kill himself.

In the search market, DuckDuckGo is not the only engine responding to the demand for alternatives. Microsoft has launched a Bing browser extension called “Bing AI Search Choice,” which gives users the option to turn off features like AI chat.

“AI is doing powerful things for search, but research tells us that not everyone wants to use AI for everything all the time,” Jordi Ribas, president of search and AI at Microsoft, wrote in a LinkedIn post about the update.

There’s also a growing tension among publishers who have seen traffic from Google’s search engine in part because AI pulls information snippets to the top of results, eliminating the need to click. In an antitrust battle with the Justice Department, Google admitted last year in a court filing that the open web was “just going downhill fast,” a sentiment that was at odds with what the company’s executives said.

Research from data panels like SparkToro and Similarweb shows that nearly 68% of all Google searches now end without a single click on an external website. Condé Nast CEO Roger Lynch, in an interview last month with TBPN, said his team had predicted a three-year decline in search traffic, and “every year they’re down more than we predicted.”

“Last year, I told our teams that they thought there was no search,” he said. “You have to have your business plan as if search is zero.”

Even after Google’s slide on Monday, the stock is still up more than 100% over the past year, outperforming all of its hyperscaler peers. The company has shown the ability to survive and thrive through major platform changes, especially from the web to smartphones, and has proven to be a major player in AI production despite its slow start.

On the last earnings call, Photosi pointed out that increased user engagement in AI experiences such as AI Mode and AI Overview, are major investment areas.

“AI continues to drive search usage and queries are at a premium,” Photosi said on the call.

However, Google turns on AI Overview by default, which means, in the words of DuckDuckGo’s head of policy Kamyl Bazbaz, users are “not given a choice.”

Reid, Google’s search leader, said on a Bloomberg podcast in April that “there’s this myth that people want AI or the web.”

“I actually think what we’re seeing is that people are looking for AI on the web together,” he said.

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