AI could be mounting a threat to Google’s hegemony over search: Google’s management team late last year declared a code red for the company in response to the public unveiling of ChatGPT, signaling the approach of potentially serious competition to the search engine’s core business. The new technology represents a risk so substantial that current management at Google called in the company’s founders, Larry Page and Sergey Brin, for ideas on how to maneuver the looming threat of generative AI.

Traditional search engines could become obsolete in the near future: The introduction of ChatGPT, Open AI’s generative AI-based software that can churn out essays, poems, code and thoughtful responses to questions rather than links to potential answers in the way a basic search engine like Google does, could potentially wipe out many users’ reliance on traditional search engines for basic, straightforward information. Already, a third of white-collar employees in different industries — including banking, tech, and marketing — have tried using AI-based platforms and tools at work.

Google has typically been hesitant to roll out chatbots in the past, probably for good reason: Google parent Alphabet launched Bard, its AI chatbot response to ChatGPT, last month — but Bard made a factual error in Alphabet’s presentation, causing investors to worry that Alphabet is losing ground to Microsoft in the AI race. The botched launch came after Google was previously reluctant to come out with an AI-powered chatbot due to copyright, privacy, antitrust issues it finds central to the technology in its current form. According to a recording obtained by the NYT, Chatbots’ history of delivering racist and sexist responses are also to blame.

This wasn’t Google’s first go at AI: Google’s LaMDA — or Language Model for Dialogue Applications — made headlines last year after a company engineer falsely claimed the chatbot had achieved sentience. The company is also planning to release some 20 new products including a chatbot-equipped version of its classic search engine at some point this year, the NYT reports, citing a private Google presentation it viewed.

AI-driven search is bad for business: One of the biggest challenges traditional search engines are facing with the rise of these generative AI systems is the question of monetization, specifically how to run the digital ads that are central to their business model. Ads comprised some 80% of revenue for the company in 2021. Having chatbots come up with responses in sentence form makes it less likely that users will click on a sponsored link or come across a digital advertisement.

But it doesn’t necessarily seal Google’s fate: Even with the popularity of generative AI systems likely to continue growing over the coming years, it's not yet clear that they’ll completely replace traditional search engines. One of the reasons is because systems like ChatGPT and Neeva are subject to inaccuracy and bias. Another defining feature that makes search engines useful amid generative AI popularity is that they offer user direct access to sources. “Solutions like ChatGPT, they offer you an answer, Google is offering you results. So, if you get results, you can choose — you can read more than one opinion,” CEO of AI-search engine Nuclia tells TechMonitor.

Microsoft has been going big on AI: Microsoft said in January that it would be making a multi-bn USD investment in OpenAI, which sources close to the agreement estimate could be worth some USD 10 bn. The announcement comes after Microsoft in 2019 said it would invest USD 1 bn in OpenAI to develop an AI-backed version of Microsoft's Azure cloud computing service and as it aims to step up its competition against Google and Apple in “the next major wave of computing,” Microsoft CEO Satya Nadella last week said. Company executives are reportedly aiming to incorporate generative AI technologies into many of its products like Microsoft Office and bringing an AI-powered Bing to the public.

And they’re not the only ones: Investors over the past two years have been pouring money into generative AI systems and trying to capitalize on the hype generated around these kinds of technologies. VC investment into this kind of tech has grown 496% between 2020 and 2022 to reach USD 1.37 bn according to PitchBook.