Key Takeaways
In the run-up to Alphabet’s third-quarter earnings call on Tuesday, Oct. 29, analysts had predicted a slowdown in the company’s search business would weigh on its earnings.
However, not only did Google easily beat analysts’ forecasts, but it also posted stronger-than-expected growth for its search revenues, highlighting how it has maintained dominance despite multiple threats to its core business.
Since OpenAI released ChatGPT in 2022, pundits have anticipated its potentially catastrophic effect on Google.
As the argument goes, the value of traditional search engines is significantly diminished in a world where chatbots can succinctly answer even complex questions without users having to trawl through multiple websites.
Even Alphabet’s leadership expressed concern, issuing a “code red ” in the weeks after ChatGPT’s launch, positioning the new technology as an existential threat to Google’s long-standing dominance.
But despite their fear, no shock to Google’s search revenue ever occurred.
Ahead of Tuesday’s earnings call, analysts had forecast Google’s search revenues growing by 11.6% year over year. However, they increased 12.2%, beating expectations.
Even before the modern chatbot boom, several paradigm shifts in how people access digital information had already prompted prophecies of Google’s demise. In fact, predictions of the “end of Google” occur so frequently they have their own Wikipedia page .
Nonetheless, rival search engines, Wolfram Alpha, Siri, and now the rise of chatbots, have failed to dent the search engine’s growth so far.
The platform’s tenacity can be attributed to its ability to adapt to new technologies and usage patterns.
For instance, with the emergence of smartphones, Google adapted its user interface accordingly and spent billions of dollars ensuring it was pre-installed as the default search engine on devices.
In response to the emerging threat posed by ChatGPT and its peers earlier this year, the company unveiled AI Overviews, a new feature that incorporates AI-generated summaries of web content into search results.
Other AI search products Google has introduced recently include Circle to Search on Android and greater integration of Google Lens across its platforms.
During Tuesday’s earnings call , Alphabet CEO Sundar Pichai said these advancements in AI search “are transforming the user experience, expanding what people can search for and how they search for it.”
With AI Overviews rolling out in over a hundred new countries on Oct. 28, Pichai said the firm was seeing strong engagement among users, with people asking longer, more complex questions and increasing their overall search usage.
Crucially for Google’s revenue prospects, he said the integration of ads within AI overviews was “performing well.”
Of course, the AI search market continues to evolve. With new takes on the concept from companies like Meta continuing to emerge, Google’s leadership is far from guaranteed. Nonetheless, the platform has a strong record of surviving market disruption, and the force of entrenched search habits is on its side.