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Bloomberg Businessweek Weekend - July 26th, 2024
Bloomberg Businessweek
AI Innovation Sustains Market Dominance
The search market exhibits strong resilience with significant growth despite intense competition. Google continues to grow in the search domain, achieving mid-teen growth rates while holding a commanding 90% market share, showcasing the effectiveness of its AI initiatives. Although Bing has integrated ChatGPT to enhance its offering, Google’s experimental AI appears to be sufficient in maintaining its lead. The current monetization strategy relies heavily on keyword-driven ads, with a historical trend of only 30% of queries being monetized. Despite some shifts towards AI-driven search alternatives, Google's ability to sustain its market share indicates robust adaptability and potential for future revenue growth through services like Gemini Advance.
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Speaker 9
And look, is this like a kind of ho-hum earnings report? I think, look, when I look at search growing mid-teens, that just tells me, you know, a company with $200 billion run rate in search business, 90% market share, still manages to grow double digits.
Speaker 2
So, it's experimental AI is working?
Speaker 9
It's working. And it's maintaining market share despite competition from chat GPT, Bing, you name it. Everyone keeps talking about how they are. He just said Bing. Is there really competition from Bing? Well, Bing has integrated chat GPT now. So that was what Satya Nadella was most excited about. I am curious about the lack of ads that I see when
Speaker 2
I look for, when I do a Google search and I see the experimental AI result. It doesn't seem like they're making money from me.
Speaker 9
Yeah, but if you go back in time, Google only monetized 70, like, 70% of their queries are not monetized, only 30% are monetized, and that too, it's a very keyword-driven business. So, you know, people bid up for keywords, that's what drives the ad pricing. And in this case, you know, unlike social media that can increase ad loads, Google is not increasing ad loads. It's still keyword driven. And they're able to maintain that share, you know, despite chat GPT coming in and for certain queries, I'm sure people are going more to chat GPT than coming to traditional search. But I mean, I think Google has a competing offering with Gemini Advance, and that will be a subscription revenue stream down the line.
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