Google in crisis? Not only facing three invisible opponents, but also facing the anti-monopoly sword

Is Google really used by elderly people?

According to a special report in The Wall Street Journal, the search giant, considered untouchable in the tech world, is now facing at least three interrelated but not fatal 'invisible crises', including: search behavior moving away from Google; AI search engine selection and usage rising in sync; and declining search quality.

If we have to explain the most core factor in plain language, it's this: People now don't love using Google as much as before, especially Z-generation users.

From the perspective of search market share, Google is still the dominant player. However, due to the changes in the overall internet ecosystem mentioned above, as well as the anti-trust lawsuits from the U.S. Department of Justice, Google's search business and advertising revenue are facing long-term risks of decline, which is like a thorn in the back.

AI Search Rise: Intensified Competition in Search Advertising Market

According to market research firm eMarketer's forecast, Google's market share in the US search advertising market is predicted to fall below 50% for the first time by 2025. This marks an unprecedented challenge to its long-standing monopoly. Users are becoming more accustomed to directly searching for products on Amazon, which has taken away the advertising revenue that originally belonged to Google.

Meanwhile, although TikTok currently accounts for less than 4% of the digital advertising market in the United States, its rapidly rising search function is attracting Generation Z users and advertisers' attention. The daily search volume has reached a staggering 3 billion times, becoming the foundation of the platform's future advertising revenue monetization.

The rise of artificial intelligence search engines similar to Perplexity poses a more significant threat to Google. For example, OpenAI's ChatGPT has integrated web search functionality, Meta is also developing its own search engine, and Microsoft and Apple are embedding AI assistants directly into their operating systems, forming strong competition to Google's traditional search mode.

New York University business school professor Melissa Schilling likened this change to the impact of AI on search, just as e-commerce had a profound impact on Walmart at the time.

To respond to this situation, Google has launched AI search summaries in the United States, attempting to retain market share in an innovative way. However, whether these efforts can curb user outflow and revenue decline remains to be seen.

AI Content Proliferation/Popularization: Weakening User's Active Search Motivation

In addition to the direct threats from competitors, another problem that Google may not be able to easily deal with is the gradual deterioration of the Internet ecosystem. AI-generated content floods the Internet, leading to a decline in the quality of search results, further weakening users' trust in Google search. At the same time, Google's own AI search summary function, while improving the user experience, may also significantly reduce website traffic, leaving content creators struggling to generate revenue.

According to the advertising data platform Skai, the click-through rate of Google search ads in the third quarter of 2024 decreased by 8% compared to the same period last year. A reasonable speculation is that Google's AI summary may have been effective, so users have less reason to 'scroll down', naturally resulting in a lower probability of clicking on ads.

Image source: Google Google AI Overviews function, so users have less reason to scroll down.

SEO software company Authoritas, in a study conducted in January, found that AI summaries in Google search results could disrupt the rankings and traffic of existing websites. Advertising sales company Raptive also predicts that the transformation of AI summaries in the search field could result in a $2 billion loss in revenue for publishers.

In other words, reducing income reduces the resources for website creation, which will further deteriorate the quality of search results, forming a vicious cycle.

Ministry of Justice's anti-monopoly big knife: expected to narrow the market share gap between Google and its competitors

On the other hand, the U.S. Department of Justice's antitrust case against Google is still ongoing, and it recently suggested splitting up some of its businesses, including prohibiting the default Google search engine on Android devices and selling Chrome browser.

However, Harvard Business School professor David Yoffie believes that this legal attack and defense may take several years, and the market competitive pressure may have had a more profound impact on Google before this. He pointed out that the habits of tech users have a certain degree of adhesion, but once "significantly better products" appear in the market, the status of giants will quickly disintegrate.

To face the future, Google must find a balance between technological innovation and business models to solidify its dominant position in the increasingly competitive environment of search engines.

However, optimists also believe that Google still holds a huge user base in addition to its search engine, as well as a massive software ecosystem including Android, YouTube, Google Maps, etc. According to StatCounter data in November 2024, Google still occupies 89.98% of the market share in terms of search volume, while its second largest competitor, Bing, only has a global market share of 3.94%.

Therefore, the real urgent crisis may still be whether the U.S. Department of Justice can limit Google's search dominance on Android and the factors of splitting Chrome browser on antitrust grounds.

[Disclaimer] The market is risky, and investment needs to be cautious. This article does not constitute investment advice. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific situation. Investing based on this is at your own risk.

This article is authorized to be reproduced from: 'Digital Era'.

Original Title: "Do only the elderly use Google? 3 invisible opponents: TikTok, Perplexity⋯ slowly threatening the search landscape"

Original author: Li Xiantai

The article 'Is Google in Crisis? Not only does it have three invisible opponents, but it also faces the anti-monopoly sword' was first published in 'encryption city'