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Google's Search Empire Faces Major Challenges, as TikTok and AI Startups Rise

AInvestThursday, Oct 17, 2024 9:52 am ET
1min read

While Microsoft's ChatGPT hasn't shaken Google's dominance in search, the landscape is now shifting. 

Google's grip on the search advertising market is weakening as artificial intelligence and social video platforms like TikTok emerge as serious competitors. The rise of generative AI is transforming search products, offering fully formed answers or summaries in response to user queries, which could redefine the industry.

According to eMarketer, Google's share of the U.S. search ad market is expected to drop below 50% next year for the first time in over a decade.

TikTok, in particular, is stepping up its challenge to Google by allowing brands to target ads based on users' search queries. TikTok claims that "search behaviors have evolved," reporting that its platform handles over three billion daily searches globally, with 23% of users searching within 30 seconds of opening the app. 

Digital ad agency Tinuiti reports that nearly two dozen of its clients, spanning categories like consumer electronics, apparel, and beauty, are already buying TikTok's new search-based ads, with most seeing positive results. 

Perplexity, an AI-powered search startup backed by Jeff Bezos, is also set to introduce ads beneath its AI-generated answers. E-commerce platforms, where many consumers begin product searches, are further increasing the pressure on Google. A survey by New Street Research found that almost 60% of U.S. consumers have used a chatbot to research or make purchase decisions in the past 30 days.

Despite this, Google remains in a strong position, still leading the search market with vast resources to fend off competitors. However, advertisers are eager for more options. As veteran digital-ad executive Nii Ahene remarked, "For the first time in probably 15 years, we will have viable alternatives to Google." Is this a vulnerable moment for Google? Absolutely.

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