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While true, Google is particularly vulnerable to AI disrupting the traditional internet ad model. They have to figure out how to make AI profitable or Google wi

While true, Google is particularly vulnerable to AI disrupting the traditional internet ad model. They have to figure out how to make AI profitable or Google will suffer catastrophic revenue, profit, and stock price declines in short order.

dspillett 18d ago
Can they not just do what they expected sites to do when their search results started including key extracts from sites, significantly reducing click-throughs to news pages and such? [couldn't resist the snark, I don't exactly feel sorry for them here!]
- Gareth321 18d ago
  It is, as you imply, poetic justice.
akoboldfrying 18d ago
Isn't it obvious? If/when the norm shifts from "googling" everything to asking an LLM, they'll stick ads in Gemini output. They'll probably be less annoying than ads in Google Search results, because people ask LLMs more detailed, context-laden questions.
- Gareth321 18d ago
  I think this is their obvious strategy. What's not so obvious is that they'll succeed. Their share of consumer LLM users is around 27%. Their share of search engine users is above 91%. If current growth trajectory holds (which is admittedly unpredictable), Google will command far less of the global internet ad market. I expect aggregate ad revenue to climb, so this might sting less, but much of Google's stock price imputes their dominant market position (and implied moat). A large proportion of users don't first navigate to Google anymore. They ask ChatGPT. Commoditised LLMs (or worse, a dominant provider which isn't Google) is a very bad scenario for Google. I think they're going to have to diversify. Cloud compute revenue keeps climbing. Their deal with Apple for "small" LLMs suggests they might have opportunities to specialise models for specific tasks. They still command a massive lead in things like Maps and Gmail, and they can lean on those.

dspillett 18d ago

Can they not just do what they expected sites to do when their search results started including key extracts from sites, significantly reducing click-throughs to news pages and such? [couldn't resist the snark, I don't exactly feel sorry for them here!]

Gareth321 18d ago
It is, as you imply, poetic justice.

akoboldfrying 18d ago

Isn't it obvious? If/when the norm shifts from "googling" everything to asking an LLM, they'll stick ads in Gemini output. They'll probably be less annoying than ads in Google Search results, because people ask LLMs more detailed, context-laden questions.

Gareth321 18d ago
I think this is their obvious strategy. What's not so obvious is that they'll succeed. Their share of consumer LLM users is around 27%. Their share of search engine users is above 91%. If current growth trajectory holds (which is admittedly unpredictable), Google will command far less of the global internet ad market. I expect aggregate ad revenue to climb, so this might sting less, but much of Google's stock price imputes their dominant market position (and implied moat). A large proportion of users don't first navigate to Google anymore. They ask ChatGPT. Commoditised LLMs (or worse, a dominant provider which isn't Google) is a very bad scenario for Google. I think they're going to have to diversify. Cloud compute revenue keeps climbing. Their deal with Apple for "small" LLMs suggests they might have opportunities to specialise models for specific tasks. They still command a massive lead in things like Maps and Gmail, and they can lean on those.