The Search Cost of Google vs Chat GPT

Google makes about three bucks per click with a 3% click-through rate on ads, resulting in an estimated revenue per search of about five to 10 cents. Assuming a 50% margin, Google's cost to run a search and present ads is around two and a half cents per search. In contrast, running the GPT three model for chat GPT costs approximately 30 cents per result, making it about 10 times more expensive than traditional search queries. To become economically competitive with Google, chat GPT solutions need to achieve a 10x reduction in cost, which involves optimizing compute platforms, hardware, and chips. If chat GPT were to scale to the level of Google, it would cost around $80 billion per quarter to run across all search queries. Therefore, while chat GPT has the potential to be a game changer for certain search queries, significant work is still needed to make it economically viable for businesses like Bing or Google.