Disruption Comes to Google

🌈 Abstract

The article discusses the dynamic nature of the tech industry and the challenges faced by established companies like Google in the face of disruptive technologies like LLM-based answer engines. It examines Google's dominant search business model and the potential threats posed by the rise of tools like ChatGPT, Perplexity, and Microsoft's Copilot.

🙋 Q&A

[01] The Changing Tech Landscape

1. What are the key points made about the dynamic nature of the tech industry?

• The tech industry is extremely dynamic, with the only constant being change
• Companies that were once invulnerable can be disrupted by upstarts unless they adapt, as seen with the decline of Microsoft and Intel due to the shift from PCs to mobile devices

2. How is Google facing potential disruption in its core search business?

• The rise of answer engines like Perplexity, ChatGPT, and Microsoft's Copilot is posing a threat to Google's search dominance
• The media narrative has turned against Google, with articles questioning the company's ability to keep up with the AI competition

3. How do the facts compare to the media narrative around Google's situation?

• While the media portrayal is quite negative, the facts show that ChatGPT's growth has flatlined since May 2023, and Alphabet reported record profits last quarter
• The truth lies somewhere in the middle, as the article suggests

[02] Google's Search Business Model

1. What is the key aspect of Google's search business model?

• Google's business model is based on people coming to its search engine to find goods and services, and Google showing them ads, which it gets paid for when people click on them
• This created a feedback loop where more internet users led to more content for Google to index and more traffic for websites

2. How has Google maintained its dominance in search?

• Google has paid over $26 billion a year to ensure it captures the most valuable search entry points, preventing upstarts from disrupting it as it did to earlier search engines

3. How do LLM-based answer engines threaten this model?

• LLM-based answer engines can provide direct answers to user queries, without sending traffic to websites, disrupting the symbiotic model that benefited Google
• This also undermines Google's ability to show ads as the first result, a key part of its business model

[03] Potential Disruption and Google's Response

1. What are the two key questions for Google regarding the threat of LLM-based answer engines?

• Whether these engines can actually eat into Google's lucrative search ads business
• Whether Google will risk cannibalizing its own business by transitioning to a more LLM-based approach

2. How has Google responded to disruptive threats in the past?

• The Android team famously started over when they saw the iPhone, going from a Blackberry-style product to one more competitive with the iPhone
• This allowed Android to become much more dominant than Blackberry

3. What are the two most important jobs at Google today, according to the article?

• Determining whether LLM-based answer engines pose a serious threat to Google's search ads business
• Deciding whether Google should proactively cannibalize its own business model to transition to a more LLM-based approach