Google Faces Growing Challenge from OpenAI as Antitrust Ruling Looms

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As Google awaits a critical decision from antitrust regulators in Washington, it is grappling with a new and formidable challenge: the rapid rise of artificial intelligence, particularly driven by Sam Altman’s OpenAI. A recent U.S. court ruling, which found that Google had unlawfully established a search monopoly, represents a significant victory for regulators. However, the impact of this ruling may be overshadowed by the accelerating influence of AI tools, including OpenAI’s widely used ChatGPT chatbot.

Arvind Jain, a former Google engineer who worked on the company’s search products for a decade and now leads the enterprise search firm Glean, emphasized that AI’s transformative effect on search technology is a more pressing issue for Google than the legal battles. “AI is fundamentally reshaping the search product,” Jain noted, highlighting that the immediate effects of AI are more pronounced compared to the gradual impact of legal rulings that often take years to resolve.

Historically, Google has dominated the search market, commanding approximately 90% of global market share and generating around $175 billion in annual revenue from its search business. Even tech giant Apple, known for its preference to control its own software and hardware, has allowed Google to be the default search engine on its devices in exchange for substantial fees. However, this preferential treatment may be coming to an end, with Apple recently announcing a partnership with OpenAI to integrate ChatGPT into its upcoming devices. This deal is non-exclusive, suggesting that Apple could also explore collaborations with other search providers, including Google.

The potential for Apple’s move towards AI-powered search services could be accelerated if Google is compelled to end its search deal with Apple, according to analysts. Additionally, Microsoft-backed OpenAI has ventured into the search domain with the gradual launch of SearchGPT, an AI-driven search engine designed to provide real-time information from across the internet.

A former senior Google executive predicted that AI’s progress could outpace regulatory actions against Google. “AI is evolving faster than the Department of Justice’s ability to address Google’s monopoly. The landscape of search could change drastically due to the rapid advancements in AI,” the executive stated.

Despite possessing the necessary resources—such as advanced language models and an extensive search engine—Google’s efforts to leverage AI seem disjointed in the face of OpenAI’s rapid advancements, which are resonating particularly with younger audiences. Generative AI’s sudden popularity caught Google off guard, as it did not release a competitive consumer product until well after ChatGPT became a sensation in early 2023.

Rebecca Wettemann, CEO and principal analyst at research firm Valoir, suggested that Google might be its own worst enemy. “The key to AI adoption is trust, and Google’s early missteps with its AI Search Overviews—such as delivering incorrect information and affecting publisher referral traffic—showed a lack of focus on accuracy,” Wettemann commented. Google had to scale back this feature earlier this year due to widespread criticism.

Analyst Gil Luria of D.A. Davidson believes that the regulatory scrutiny and AI competition are interconnected. “The DOJ’s scrutiny of Google’s business practices is partly due to the current market turbulence and the desire to prevent Google from extending its market dominance,” Luria explained.

While the antitrust ruling may not yet significantly impact Google, it could pave the way for increased competition in the search market. Richard Socher, CEO and founder of AI search engine startup You.com and former chief scientist at Salesforce, acknowledged that dismantling Google’s search dominance would be challenging. “No one has yet made a substantial dent in Google’s search market share. We’ll need to see if this ruling is a catalyst for greater consumer choice and competition in search,” Socher concluded.