Google has appeared to be an unstoppable force for the better part of 15 years, propelled by the strength of its internet search engine and digital advertising company. However, both appear to be becoming increasingly fragile.
The Justice Department accused Google of operating an illegal monopoly in its internet advertising business this week, and demanded that parts of it be broken up. The claim comes a few years after the Trump administration launched a similar suit challenging Google’s dominance in search.
The Justice Department, according to Google, is “doubling down on a weak premise,” and the latest complaint “attempts to pick winners and losers in the highly competitive advertising technology field.” If both major lawsuits are successful, they could upend the financial model that has made Google the most powerful advertising corporation on the internet. It would be the most significant antitrust victory against a technology behemoth since the US government took on Microsoft more than two decades ago.
Despite the fact that the cases are at the heart of Google’s income machine, they could take years to resolve. Meanwhile, two other vexing concerns appear to be determining Google’s future in a potentially shorter timeframe: the emergence of generative artificial intelligence and what looks to be an increasing decrease in Google’s online ad marketshare.
Google announced plans to let off 12,000 people only days before the DOJ action, despite a sharp slowdown in revenue growth and as it attempts to refocus its efforts, in part, around AI.
A new search threat
Google has long been associated with internet searches; it was one of the first modern technology corporations to have its name become a verb. However, a new threat came late last year when OpenAI, an artificial intelligence research company, officially launched ChatGPT, a viral new AI chatbot platform.
ChatGPT users have demonstrated the bot’s ability to generate poetry, draught legal papers, develop code, and explain complicated ideas using only a basic instruction. ChatGPT, which has been trained on a massive amount of online data, can generate lengthy responses to open-ended questions, though it is prone to some errors, or answer simple questions like “Who was the 25th President of the United States?” that one might have previously had to scroll through Google search results to find.
ChatGPT is trained on massive volumes of data, which it then uses to produce responses to human questions. While the underlying technology of ChatGPT has been around for a while, the fact that anyone can create an account and experiment with the tool has generated a lot of hype for generative AI and made the technology’s potential instantly understandable to millions in a way that was previously only abstract. It is also said to have forced Google’s executives to declare a “code red” crisis for the company’s search division.
“Google may be only a year or two away from catastrophic disruption. “AI will remove the Search Engine Result Page, where they make the majority of their money,” Paul Buchheit, one of Gmail’s developers, tweeted last year. “Even if they catch up on AI, they won’t be able to fully deploy it without killing their most important asset!”
According to the reasoning, if more people come to rely on AI for their information needs, it might undermine Google’s search advertising, which is part of the company’s $149 billion revenue division. This impression has been reinforced in media coverage of ChatGPT, with some sites putting ChatGPT versus Google in head-to-head tests.
Not always a nightmarish situation
There are some reasons to doubt that Google will face this terrible scenario.
For starters, Google operates on a far larger scale. According to the traffic research website SimilarWeb, Google’s website received more than 86 billion views in November, compared to less than 300 million for ChatGPT. (ChatGPT was made available to the public in late November.) For instance, even if Google gives precise, AI-generated solutions to user inquiries, it may still analyse the questions and provide search advertising, as it does now.
Google has its own investments in advanced artificial intelligence. Last year, one of its AI-powered chat programmes, LaMDA, became a source of contention after a company engineer claimed it had attained sentience. (Google refuted the claim and dismissed the engineer for violating company rules.)
Google CEO Sundar Pichai reportedly informed staff that, while Google has capabilities similar to ChatGPT, the business has yet to commit to providing AI-generated search responses due to the risk of supplying erroneous information, which might be detrimental to Google in the long term.
Google’s stance underlines both its enormous influence as the most trusted search engine on the planet and one of the major issues with generative AI: Because of the technology’s black-box architecture, determining how the system arrived at a certain outcome is nearly impossible. For many people, and for many years to come, the ability to analyse multiple sources of information for themselves may outweigh the ease of obtaining a single response.
Under pressure, an ad sales machine
All of this has occurred against the backdrop of what appears to be a multi-year decrease in Google’s online advertising marketshare. According to third-party industry estimates, Google’s dominance in digital advertising peaked in 2017 with 34.7% of the US market, and it is on track to account for 28.8% this year.
Google isn’t the only advertising behemoth to be affected by this trend. One-time events such as the pandemic and the war in Ukraine, as well as fears of an approaching recession, have all had a significant impact on the online advertising business. Others, such as Facebook-parent Meta, have been especially vulnerable to systemic changes such as Apple’s app privacy upgrades, which limit the amount of information advertisers can access about iOS users.
However, the fall coincides with Google’s entry into a new market. Amazon, TikTok, and even Apple have been vying for a larger slice of the digital advertising pie.
Whatever the source, Google’s still large advertising business appears to be facing increasing difficulties. And those headwinds might be compounded if some of the generative AI predictions come true, or if the Justice Department’s litigation eventually undercut Google’s hold on digital advertising.
As part of the action, the US government has asked a federal court to annul two purchases that it claims helped solidify Google’s advertising monopoly. According to the US government, dismantling Google’s closely integrated ad machine will restore competition and make it more difficult for Google to reap monopolistic profits.
This and other antitrust actions, while concerning in their own right, simply add to Google’s larger quandary as it faces a new period of potentially turbulent technological development.
