Google mulls fundamental change to search business

Google is considering putting its AI-powered search service behind a paywall – a move that could change the face of the internet as we know it – potentially turning it into a product with a much more niche user base.

Why AI search matters

The advent of artificial intelligence is expected to change how we interact with machines, not least the engines that help us to make sense of the vast archive of information on the internet. With the fundamental business model of search advertising under threat, the company that turned search into a business is thinking about a radical reinvention to its most important product. 

However, talk of threats should be tempered by the fact that heavy use of AI is anything but mainstream. A UK/US/China study by Omdia last year found that just 10% were regular or semi-regular users of AI services. This might point to subscriptions – similar to what Open AI has done – as a partial solution to a technology that is hugely expensive to run but is as yet finding quite a niche user base.

The nature of premium

The FT reports that Google is considering several options which might help to mitigate the AI threat to its core advertising business, quoting three people with knowledge of the company’s internal workings. 

• In a statement, Google said it was “not working on or considering” an ad-free search experience but was working on “new premium capabilities”.
• Under the plans, which are under technical development as top brass decide whether to formally roll them out, AI-powered search features would become part of its premium subscription. 
• Traditional search is expected to remain free (with ads in search results as ever) while ads will also appear alongside search results even in the premium tier. 

The news offers one way of monetising the Search Generative Experience that the company has been working on since last year, given that this costs more in computing power to create and brings in less advertising revenue than traditional search because it provides full answers rather than links. 

So far, Google’s integrations of AI with its lucrative advertising business have focused on helping advertisers use AI to create search campaigns. Other generative features have been more experimental (and much less clear on how they would monetise). 

For Google, a threat to search – an arena in which it is the undisputed market leader – would be critical. Search has grown solidly and shown itself to be resilient through many different crises, but as the leader it is incumbent on Google to understand where the format goes next. 

Sourced from the FT, WARC, Omdia