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Google contemplates a potential shakeup to its core business model. According to a Financial Times report, Google is exploring ways to offer premium AI-powered search features within its flagship search engine for a fee. These features, sources suggest, could be integrated into existing subscription services like Gemini Advanced or Google One.
Crucially, the report highlights that even the premium tier would retain advertising. This suggests Google's balancing act: implementing cutting-edge AI while safeguarding its lucrative search ad revenue, which amounted to a staggering US$175 billion last year. The pressure to innovate is likely amplified by the rise of OpenAI's ChatGPT, pushing Google into a competitive race for AI dominance in search.
Google has been testing its AI-powered search experience, dubbed Search Generative Experience (SGE), since May 2023. SGE provides AI-generated summaries and responses alongside traditional search results. Initially opt-in, Google has recently begun limited testing with SGE as the default experience. However, the high computational costs associated with generative AI models may be hindering wider implementation.
While SGE offers user benefits like comprehensive answers, it also presents a challenge to Google's current business model. AI-generated answers could lead to fewer user clicks on website links, potentially reducing ad impressions and impacting Google's primary revenue stream.
The report concludes by stating that Google engineers are actively developing this technology, but the final decision and launch timeline remain unclear.