Google Won the Search Wars, but Can It Win the AI Search Wars?

Google is the undisputed leader in the search industry but is now facing new challenges that threaten its dominance.

According to the latest statistics, Google currently holds roughly 93% of the global search market. Its closest rival, Bing, holds a mere 3%. Yahoo comes in a little over 1%, and other search engines don’t even break single-digit percentages.

Despite its dominance, however, Google’s search business is facing an existential threat, the likes of which it has never faced before — artificial intelligence. Just as Google’s search algorithms upended the market and killed off Alta Vista-style category searching, AI is poised to eliminate traditional search that returns pages and pages of links. Instead, AI can provide answers in a conversational manner much more akin to how human beings communicate.

Enter ChatGPT

While conversational AI has been a dream of many for years, OpenAI’s ChatGPT took the world by storm, offering the most advanced interpretation of the technology to date. Almost overnight, ChatGPT was being used for everything from writing letters to authoring papers to helping students with their schoolwork.

ChatGPT was so successful that it caused something of a panic within Google as industry experts predicted the tech’s ability to put an end to traditional search. The potential wasn’t lost on Google’s rivals either, with at least a couple of them announcing plans to roll out AI-powered search.

The Frontrunner: Microsoft

Microsoft has quickly emerged as the biggest threat to Google’s search. In addition to being its biggest rival — albeit a very distant one — Microsoft is one of the main investors in OpenAI, the firm behind ChatGPT. In fact, the Redmond-based company just signed a multi-year, multibillion-dollar investment in OpenAI, extending a partnership that gave it exclusive access to some of the AI firm’s tech.

Microsoft has been rolling out the technology behind ChatGPT to its various platforms and services at a record pace, from email creation in Viva Sales to incorporating it into Azure OpenAI service.

The biggest way Microsoft is incorporating OpenAI’s tech is in its Bing search engine. The company previewed it earlier this week, and the reviews were largely positive. Microsoft is also including a new and improved version of OpenAI’s tech, meaning it will be faster and more accurate in the answers it provides.

Microsoft appears to be addressing the ethics of AI use as well. Business Insider’s Huileng Tan asked the new search engine to write a cover letter for a job. The AI responded that it could not do that as it would be “unethical” and “unfair to other applicants.” Bing did, however, give her general writing tips to help her and ended by wishing her “Good luck!”

China’s Answer: Baidu

Not one to be left out, Baidu is working on a ChatGPT-like AI of its own, named Ernie, which the company expects to launch publicly in March. Baidu is largely seen as the best chance for China to remain competitive in the search market, especially as the industry transitions to AI-driven results.

Despite having a home-turf advantage, Baidu may be facing a major impediment from its own government. The company’s stock took a major hit after a state media warning about the hype surrounding AI chatbots.

This wouldn’t be the first time China has sabotaged its own tech industry, with Beijing having a complicated history of alternately promoting and then punishing its tech industry. If that behavior continues, it could significantly undermine Baidu’s ability to compete.

The Dark Horse: Yahoo

Once the world’s dominant search engine, Yahoo has long since ceded the crown. These days the company outsources its search to Bing, focusing on news and other digital elements.

In late January, however, Yahoo surprised the industry by teasing a return to the search market. The company posted a job opening for a Product Manager for Search and has been dropping cryptic tweets about its plans. The company has tweeted about how it “did search before it was cool” and that it would “BRB making it cool again.”

After years of irrelevance in the search market, it’s hard to imagine what would suddenly make Yahoo decide to make a go of it again — unless the company planned to take advantage of a game-changing shift in technology to help it play catch-up.

Yahoo’s biggest challenge, of course, will be execution. The company has a long history of making bad decisions when it comes to search, passing up multiple opportunities to buy Google when the company was worth a small fraction of its current value.

The Current Leader: Google

Of course, that begs the question: What about Google? Where is the company in its AI efforts, and can it respond to this new threat effectively?

The truth is, no one really knows. The appearance of ChatGPT and Microsoft’s quick adoption of the underlying tech sent shockwaves through the search giant. CEO Sundar Pichai issued a “code red,” reorganized labor in an effort to come up with an answer, and founders Larry Page and Sergey Brin returned to assist.

The company scrambled to unveil its Bard conversational AI, only to bungle the launch when Bard provided the wrong answer to one of the questions posed to it. That mistake, at least temporarily, wiped $100 billion from Alphabet’s value as investors dumped the stock in response.

From the outside looking in, it certainly appears that Google got caught off-guard and is scrambling to play catch-up and making mistakes it can’t afford to make.

OpenAI’s founder, Sam Altman, seems to agree, likening Google to “a lethargic search monopoly.” He talks about what it would be like to be in Google’s shoes and “to think about a world where there was going to be a real challenge to the way that monetization of this works and new ad units, and maybe even a temporary downward pressure, I would not feel great about that.”

What Happens Next

Despite Google’s years-long dominance in the search market, Microsoft clearly has an advantage moving forward. The company is taking advantage of cutting-edge AI tech developed by the de facto leader in the space. What’s more, the company has invested billions to secure its ongoing, exclusive access to OpenAI’s innovations.

In contrast, Google is clearly in a position it’s not used to being in: playing from behind. It is scrambling to catch up and making the kind of mistakes common to that scenario.

Meanwhile, Baidu is similarly behind Microsoft and may face regulatory hurdles that cripple its ability to compete effectively.

While Yahoo can’t be ruled out, the burden of proof is on it, as to whether it can compete any better in the AI Search War than it did in the original Search Wars.

Ultimately, this will likely come down to a two-way battle between Microsoft and Google, the two companies that have the resources and expertise to drive this new era of AI-driven search forward.

In addition to being first to the party, Microsoft has another major advantage over its rival: It is moving like a nimble startup, outmaneuvering Google. As we have written before, in instance after instance, Microsoft is moving forward in a decisive fashion while Google gets bogged down, acting like “a stodgy, risk-averse corporate entity.”

Regardless of how much Google has dominated search to date, the future is wide open and may well be Microsoft’s to lose.