Why Google's AI Overview Feature is Genius

I have been seeing a lot of critics arguing that Google's AI Overview is Google cannibalizing itself, or more accurately cannibalizing its business model. The fact is this is completely true, but still, I believe this is the right thing Google should do if it wants to survive how AI will transform the search engine industry.

Why Google will suffer (initially)

Google's business model was always about helping websites reach the top of a search page and ad revenues when people visit those websites. But with the AI Overview feature people have a 65% chance of not clicking on any link, essentially making Google lose millions of potential revenue from advertisements, not to mention that running the AI on every query is unimaginably expensive, Google gets around 11 Billion queries a day, this is really expensive to maintain especially since this feature is completely free. But still Google is a massive company and it can absorb this extreme cost, but then the real question comes: why?

Why Google has no other option

First of all, if Google doesn't adapt to the new AI era and cannibalize its own business model, someone else certainly will. Google started as a search engine that disrupted Yahoo! using the new PageRank system that made results considerably better by ranking pages not by how much the query is mentioned in the website but by how much is it linked from other sites. The more linked a site the more links in it become more valuable, Yahoo! was disrupted by Google and had many chances to acquire the company but didn't.

Google is determined not to be the Yahoo! of the 2020s, As AI advances, people are now using chatbots as a source for their answers. The traditional approach Google used to serve people answers is becoming more obsolete and outdated, the fact that you are reading this blog post means you are one of the few surviving humans that still read, but currently most people prefer the fast short and simplified answers given by AI rather the long complicated and jargon-full articles that you have to pay subscription to read or some guy's weird blog (Hi!). Regardless of the implications this simplified version of answers is going to have on our society it seems that is it the future of answers, and if Google wants to keep its large slice of the pie in the search market then it has to disrupt itself before anyone else does. Before AI Overview was this popular and when ChatGPT first came out in late 2022 people had already stopped "Googling" for answers and started using the chatbot as a search engine, they were probably "ChatGPTing"?

Why I Think This is Unprecedented

In corporate we mostly see large corporations "disrupted" and put out of business because they fail to adapt to the new technology like Yahoo! and Kodak mainly because of good old shortsightedness and the focus on "maximizing shareholder value" and spending billions of dollars on a new technology that will cannibalize your own business model doesn't necessarily make investors very happy. But still, somehow Google under the leadership of Sundar Pichai has managed to not panic and actually start working to fix their Innovator's Dilemma, this is as far as I know unprecedented in corporate history and I think Google is clearly managing this the right way. Some might say that Google can actually just go on with its usual business model until a competitor who uses AI emerges and Google can just acquire them, the first problem with this is that they might refuse to sell and the second is that buying a competitor doesn't mean Google has solved the problem, it still has to make that company work the right way and spend millions and possibly billions of dollars on it before it starts making profit, and if you look at what Google is doing now, it's basically the same thing, so Google had better start this movement now so no one will dare to compete.
Even if Google can't make revenue from this new feature currently, it doesn't mean that it won't forever, Facebook didn't have its targeted ad engine figured out until it had around 50 million users, so Google can eventually find a way to make money through this, although it's hard to imagine, we know that the only way this can work is if we have a very transformative technology and a very creative business model with it.

As Clayton Christensen argues in his book The Innovator's Dilemma large companies that dominate an industry tend to make the break through in technology but mostly fail to turn it into products that make real money. One prominent example is The Graphical User Interface (GUI) developed by Xerox, but the company failed to commercialize it successfully for a mass audience until Apple came and turned the technology into the standard way of using a computer that most people today can't even imagine using only a terminal. We are seeing this same trend with Google, the current AI craze can all be traced to one research paper "Attention Is All You Need" published by... no one other than Google. While it is almost certain that Google isn't going to dominate the new AI industry it is very plausible to say that they have a very solid chance to holding up and adapting their business model to the new landscape.

Thanks for reading ❤️