Reports this week suggest that Google is considering charging fees for new “premium” search features powered by AI models. This is big for several reasons; firstly it would represent a major strategic shift for Google, as it would be the first time the tech giant has placed core components of its suite behind a paywall. Yet even more significantly the move underscores Google’s ongoing challenges in adapting to the ‘AI-age’ it invented and dealing with disruption to its primary advertising based revenue model. When you serve up 8.5bn searches a day, AI compute is still relatively expensive.
Essentially, AI is starting to disrupt business models in all kinds of ways, regardless of industry and size. In Google’s case, LLMs are providing more natural and conversational access to information, reducing the need for users to navigate through websites and be exposed to advertising. And it certainly does not help if direct competition is providing it for free, with Microsoft Copilot and its OpenAI model access (both now thinking of co-building the mother-of-all-datacentres in the desert). Plus new entrants such as Perplexity.ai are unbundling search with more advanced AI features.
The time required for new technologies to commoditise and disrupt is being compressed to the extreme. Where it took the automobile more than half a century, PCs about two decades, it took LLMs just a few years to become widely available. And as Joel highlights, compute growth is accelerating this process. You can figure out the trendline…
The company that invented LLMs is now facing an existential crisis brought about by LLMs. The new wave of AI (the transformer model) was born of Google’s diverse research community (and so the story goes: a serendipitous corridor conversation). But then Google lost focus and the brains behind it departed for new start-ups, allowing others (including OpenAI) to double down and overtake.
So speed will be everything. Focused fast-movers can snatch the chance to monetise early but only for a short(er) period. This will make the ability to flex (scale up, down, and pivot) a true competitive advantage, with ability to experiment, act fast and build strong partnerships (with sources of ‘AI alpha’) lifesavers. On the flipside, there will come a point when it’s simply too late for companies to adequately respond and adapt.
So what can we learn from this? The new normal is already here. Organisations can no longer afford to take a passive approach to AI. Proactively looking for commercial opportunities and vulnerabilities, understanding how to sustainably integrate AI into your core business model, and finding areas for exponential, continuous improvements.… all top priorities. In this era of relentless disruption, the choice is stark: be the disruptor or be disrupted. Not sure if there will be much in between.
Takeaways: To see the future of AI search make sure you try Perplexity.ai, Exa.ai and you.com.