24/7 Wall St. Insights
- A new OpenAI product may challenge Google’s search engine market dominance.
- Google has reason to be extremely anxious.
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Alphabet Inc.’s (NASDAQ: GOOGL) Google has been the dominant search engine since 2000, capturing over 95% of the U.S. search market. However, it may soon face real competition. OpenAI, the leading company in the artificial intelligence industry, plans to launch SearchGPT. Initially, some results will come from its media company partners.
According to the OpenAI website, “Getting answers on the web can take a lot of effort, often requiring multiple attempts to get relevant results. We believe that by enhancing the conversational capabilities of our models with real-time information from the web, finding what you’re looking for can be faster and easier.” Finding a statement that is a more significant challenge to Google’s dominance would be hard.
One reason Google should be extremely anxious is that OpenAI has created AI products at a feverish pace. While individuals can use most of its features for free, corporations have to pay a fee based on usage.
OpenAI has massive sums available to drive advances in its technology. Although it may lose as much as $5 billion this year, it has raised many times that, including $10 billion from Microsoft. OpenAI was recently valued at $80 billion.
Even if SearchGPT is a highly successful product, it will almost certainly take years to match Google’s success. In the most recent quarter, Alphabet had revenue of $84.7 billion. Of this, Google’s advertising business produced $64.6 billion. That makes it an extremely attractive target.
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