Google Faces AI Competition, Search Traffic Grows Despite Challenges

Google, the dominant player in the search engine industry, is facing competition from emerging artificial intelligence services. However, the company is not idly standing by as these new services encroach on its market share.

During a recent hearing on an antitrust lawsuit against Google's search dominance, Eddy Cue, Apple's senior vice president of services, testified that the number of web searches conducted through Apple's Safari browser decreased for the first time last month. This decline could potentially indicate a reduction in Google's search traffic, as Google pays Apple approximately $20 billion annually to be the default search engine on Safari. However, Google maintains that its search traffic continues to grow, even on Apple devices.

Cue attributed the decrease in search volume to more users opting for generative AI-based services like OpenAI's ChatGPT and Perplexity. He also suggested that Apple might add these platforms to Safari's search options in the future. This development comes as Google continues to contest the U.S. Department of Justice's efforts to force the company to sell parts of its Chrome browser and search business as part of an antitrust case.

One of the U.S. Department of Justice's strategies includes terminating exclusive agreements similar to the one between Google and Apple, which generates significant revenue for Apple. By testifying that Safari's search volume has declined, Apple may be aiming to preserve its lucrative $20 billion annual agreement with Google. If Google's business is declining, the court might see less reason to terminate such a profitable contract.

Google has been on the defensive since OpenAI launched ChatGPT at the end of 2022. The search giant was caught off guard by the application's popularity and quickly released its own generative AI chatbot, Bard. However, the initial reception was mixed. Google subsequently rebranded Bard as Gemini and introduced a series of high-performance generative AI models for the platform.

Google also introduced "AI Overview," a section that appears at the top of standard Google search results, providing AI-driven responses to user queries. Although it initially had issues, such as suggesting adding glue to pizza to prevent cheese from sliding off or advising users to eat rocks, the service has since improved significantly. According to the company, over 1.5 billion users engage with "AI Overview" each month.

Google is also testing an "AI Mode" feature within its search engine, which offers a chatbot-style interface designed to compete with services like ChatGPT, Perplexity, and Microsoft's Copilot Search. This feature replaces the traditional 10 blue links with a more interactive experience.

Despite these challenges, Google's search traffic on iOS devices continues to grow, indicating that users may be shifting away from browsers rather than from Google Search itself. This suggests that while Google faces competition, its search dominance is not as threatened as some might suggest.

Apple's claims about the decline in Safari's search volume provide a convenient argument for the company to assert that Google's search service is in decline, potentially making it less necessary to split up the company or terminate valuable agreements. However, the reality is that Google's search traffic remains robust, and the company is actively adapting to the evolving landscape of AI-driven search services.