Google’s Worst Nightmare as Competitor Raises Money
Google's position as the world's premier search product may be about to end. Threats it faces include AI, a government probe, and a new competitor. The post Google’s Worst Nightmare as Competitor Raises Money appeared first on 24/7 Wall St..
Google has been the premier search product in the world since 2000, when its market share soared. Its share of global search is close to 90% today. That may be eroded, and the erosion may be fast.
24/7 Wall St. Key Points:
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Google’s position as the world’s premier search product may be about to end.
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Threats it faces include AI, a government probe, and a new competitor.
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Threats to Google
Google has acknowledged that artificial intelligence (AI) is a threat to its search dominance. It has begun to test an AI search function on its homepage, but among a small number of test users. Management at Alphabet Inc. (NASDAQ: GOOGL), Google’s parent, needs to deal with the fact that ChatGPT dominates the AI software business, at least among consumers. There is a new version of ChatGPT labeled “ChatGPT search.”
Among the AI companies, one has taken direct aim at Google. Perplexity has just raised $500 million, which puts its valuation at $14 billion. That contrasts with Alphabet’s $1.94 billion.
According to The Wall Street Journal, “Instead of the list of blue links users have long seen on Google, Perplexity offers answers in sentence form with links to the websites it pulls information from.” Perplexity may launch its own browser.
One challenge Google faces could help Perplexity soon. The U.S. Department of Justice has launched an investigation that resulted in a victory of the claim that it is a monopoly. The U.S. District Court for the Eastern District of Virginia issued a statement that the search engine “harmed Google’s publishing customers, the competitive process, and, ultimately, consumers of information on the open web.”
The Justice Department wants to break up Alphabet by spinning out its Chrome browser. It has a 65% share of the global browser universe. Chrome is the company’s largest platform to get people to use its search function. It also has distribution deals with Apple and Samsung.
A breakup would sting Google’s business. Its search market share currently dwarfs the industry’s second-place Microsoft Bing product. Bing may not be a good enough product to take advantage of the Justice Department’s plan.
If Perplexity offers a product as good as Google’s search features, it will injure Google, whether Alphabet breaks up or not.
How to Make Money on a Google Breakup
The post Google’s Worst Nightmare as Competitor Raises Money appeared first on 24/7 Wall St..
