6 ms·

That's a problem Google has to solve too ;-) To expand: it seems inevitable that Google's SERP format will be replaced with a conversational / chatbot / agenti

by keeda 2mo ago

That's a problem Google has to solve too ;-) To expand: it seems inevitable that Google's SERP format will be replaced with a conversational / chatbot / agentic interface, which equalizes the playing field for all chatbot providers. This is because you can stuff in much fewer ads into a chat interface compared to SERPs. (They could try stuffing more ads but that would likely just push users more to the competition who have a much lower baseline on which to show growth.) As such, Google would be forced to progressively nullify its own invincible firehose of ad revenue as they deprecate SERPs in favor of AI overviews.

red_green_yell 2mo ago
Google has multiple massive cost advantages over OAI: TPUs, free access to massively valuable data (search index, gmail, maps reviews/PO/ navigation, youtube, android etc.), lower talent costs, lower training costs, lower distribution costs (they can shove AI down our throats in so many different places), lower ad infrastructure costs (it will be a lot of work for OAI to recreate adwords), lower ad sales costs (OAI deploying an ad sales team will be a massive investment). There's no way OAI has a long term advantage over google in replacing the search engine experience. Google's one major weakness is it will face the innovator's dilemma as their core search revenue gets cannibalized. But they seem to have been able to get their entire org to recognize that AI is an existential threat so at least that's a good sign.
- eru 2mo ago
  I'm not sure Google has lower talent costs. What makes you think so?
  - red_green_yell 2mo ago
    You are right to question that. I am basing that statement off of the many famous engineers that have recently left and were very highly paid. My guess is Google is ceding the frontier and the high salaries that go with it and letting Anthropic/OpenAI fight over the high priced talent that exit. The remaining non-famous engineers will not be able to command celebrity salaries. But this is just speculation and I don't have great evidence that the celebrity salaries are enough to meaningfully reduce overall talent costs. A counter point would be OAI and Anthropic can pay with more equity that they can promise will go to the moon. But all the equity base compensation eventually dilutes earnings per share so it's not free once you go public and people start caring about that.
    - eru 2mo ago
      Agreed. One effect I had in mind was much simpler: if you are the cool new company, people will want to work for you and might even take a hit in salary to do so.
- keeda 2mo ago
  Yes, Google has massive advantages, but I was shocked to realize that their infra advantage is not that massive when we found out they were paying SpaceX about a billion a month for compute, along with enough CapEx spend to turn their free cash flow negative, which inevitably hit their stock price. Then notice how many of the advantages you enumerated are directly related to their ad business. But the ad business itself is under threat. I just cannot see how they can stuff as many ads in an agentic interface as their SERPs. E.g. what's the net outcome of shoving AI everywhere if it's not going to be monetized nearly as well as their ads? My point is, Google has finetuned their ad business and surrounding ecosystem to an extreme level to sustain this absolute firehose of cash (including antitrust and rig-bidding shenanigans they were literally found guilty of) but almost all of that is disrupted by the shift to chat interfaces. I think Google will do extremely well as an AI chatbot / agent and cloud AI provider, but it will not be nearly as lucrative as the ad business they have to cannibalize to get there.
willy_k 2mo ago
Have you used the Google search engine in the past couple years? You’re painting a dichotomy that doesn’t exist and hasn’t for a good while. Edit: I missed your final paragraph. I still disagree with this argument though, people still want to go to websites.
- keeda 2mo ago
  People still want to go to websites, but it is a rapidly plummetting number. Multiple souces are already reporting a sharp drop from referral traffic from Google search, largely because people just stop at the AI overviews. To the extent that some major sites (including Reddit, which has a content licensing deal with Google already!!) are considering blocking Google crawlers: https://www.niemanlab.org/2026/07/search-traffic-has-declined-so-much-that-some-publishers-are-considering-opting-out-of-google-entirely/ https://www.niemanlab.org/2026/07/search-traffic-has-decline... https://www.techspot.com/news/113199-reddit-major-publishers-consider-blocking-google-ai-search.html https://www.techspot.com/news/113199-reddit-major-publishers...

by keeda 2mo ago

red_green_yell 2mo ago

Google has multiple massive cost advantages over OAI: TPUs, free access to massively valuable data (search index, gmail, maps reviews/PO/ navigation, youtube, android etc.), lower talent costs, lower training costs, lower distribution costs (they can shove AI down our throats in so many different places), lower ad infrastructure costs (it will be a lot of work for OAI to recreate adwords), lower ad sales costs (OAI deploying an ad sales team will be a massive investment). There's no way OAI has a long term advantage over google in replacing the search engine experience. Google's one major weakness is it will face the innovator's dilemma as their core search revenue gets cannibalized. But they seem to have been able to get their entire org to recognize that AI is an existential threat so at least that's a good sign.

eru 2mo ago
I'm not sure Google has lower talent costs. What makes you think so?
- red_green_yell 2mo ago
  You are right to question that. I am basing that statement off of the many famous engineers that have recently left and were very highly paid. My guess is Google is ceding the frontier and the high salaries that go with it and letting Anthropic/OpenAI fight over the high priced talent that exit. The remaining non-famous engineers will not be able to command celebrity salaries. But this is just speculation and I don't have great evidence that the celebrity salaries are enough to meaningfully reduce overall talent costs. A counter point would be OAI and Anthropic can pay with more equity that they can promise will go to the moon. But all the equity base compensation eventually dilutes earnings per share so it's not free once you go public and people start caring about that.
  - eru 2mo ago
    Agreed. One effect I had in mind was much simpler: if you are the cool new company, people will want to work for you and might even take a hit in salary to do so.
keeda 2mo ago
Yes, Google has massive advantages, but I was shocked to realize that their infra advantage is not that massive when we found out they were paying SpaceX about a billion a month for compute, along with enough CapEx spend to turn their free cash flow negative, which inevitably hit their stock price. Then notice how many of the advantages you enumerated are directly related to their ad business. But the ad business itself is under threat. I just cannot see how they can stuff as many ads in an agentic interface as their SERPs. E.g. what's the net outcome of shoving AI everywhere if it's not going to be monetized nearly as well as their ads? My point is, Google has finetuned their ad business and surrounding ecosystem to an extreme level to sustain this absolute firehose of cash (including antitrust and rig-bidding shenanigans they were literally found guilty of) but almost all of that is disrupted by the shift to chat interfaces. I think Google will do extremely well as an AI chatbot / agent and cloud AI provider, but it will not be nearly as lucrative as the ad business they have to cannibalize to get there.

willy_k 2mo ago

Have you used the Google search engine in the past couple years? You’re painting a dichotomy that doesn’t exist and hasn’t for a good while. Edit: I missed your final paragraph. I still disagree with this argument though, people still want to go to websites.

keeda 2mo ago
People still want to go to websites, but it is a rapidly plummetting number. Multiple souces are already reporting a sharp drop from referral traffic from Google search, largely because people just stop at the AI overviews. To the extent that some major sites (including Reddit, which has a content licensing deal with Google already!!) are considering blocking Google crawlers: https://www.niemanlab.org/2026/07/search-traffic-has-declined-so-much-that-some-publishers-are-considering-opting-out-of-google-entirely/ https://www.niemanlab.org/2026/07/search-traffic-has-decline... https://www.techspot.com/news/113199-reddit-major-publishers-consider-blocking-google-ai-search.html https://www.techspot.com/news/113199-reddit-major-publishers...