Archived: The AI Boom Is Expanding Google’s Dominance

Google became popular by offering a tool that was better than others at collecting links, ranking them, and making them searchable. It has made many billions of dollars by sending browsers this way and that, providing value to searchers and advertisers and website operators and taking tolls along the way. It built an advertising business around Search and an empire around that business.

Then came generative AI. Google, an early innovator in the space, stumbled into action after ChatGPT went viral, rolling out its own chatbots and image and video generators and installing AI-powered features across its product line. It was initially cautious with Search, its most valuable and contested property, but has since pushed ahead: first, with AI Overviews, which answer a wide range of queries with generated answers instead of a list of links, and then with a preview of “AI Mode” in Search, which replaces the standard search experience with a chatbot attached to a web crawler. Google’s official story — and prevailing press narrative — has been one of a company meeting a new challenge, embracing a new technology, and fending off fresh competition. But the story of a stunned and beleaguered Google understates just how powerful its position was and the extent to which it has been able to leverage it, already, in the age of generative AI.

Here’s another way to tell it: Google built and maintained the world’s most extensive index of the web, a ranked and sorted database of as much online human activity and output as it could find. Then, under the auspices of a pivot to AI, it started treating that information as its own, first by incorporating it into its models and then by using those models to generate content for users instead of sending them to an outside source. This is a meaningful change in Google’s relationship to “the world’s information,” to borrow its favored term, less clearly about making it “universally accessible and useful” than about incorporating it directly into a proprietary product. It’s also a somewhat better background for understanding why the company is doing so incredibly well, per CNBC:

Alphabet reported second-quarter results on Wednesday that beat on revenue and earnings, but the company said it would raise its capital investments by $10 billion in 2025. Shares of the company were up as much as 3% in after-hours trading. The company’s overall revenue grew 14% year over year, higher than the 10.9% Wall Street expected.

Some of the biggest contributors to Google’s blockbuster quarter had little to do with AI — YouTube advertising, in particular, is growing extremely fast — but it’s clear that Google, in the early stages of its remodeling of Search, has found a pretty good way to squeeze more value out of the web: by incorporating it into a chatbot and installing that chatbot on top of Search. Companies like OpenAI could still represent a long-term threat to Google — as could the United States government — but for now things are going very well.

As any website or online business with an analytics dashboard could have told you for the better part of a year, this has had some consequences outside of Google. The company has pushed back against reports that Search has been sending fewer people to outside sources; last month, Alphabet CEO Sundar Pichai told The Verge that, actually, if you take into account all forms of online content, we’re in an “expansionary moment,” and also that the number of websites available to them — a strange metric that might be affected by the widespread availability of automatic website and content generation tools — has “gone up by 45 percent in the last two years alone.” Elsewhere, numbers are telling a clearer story. In a June interview with Axios, Matthew Prince, CEO of internet-infrastructure company Cloudflare, shared some internal data. “Ten years ago,” he said, “for every two pages [Google] scraped, they sent you one visitor.” Ten years later, he said, “for every six pages that Google scrapes, they send you one visitor.” In the six months before June, he said, the ratio had shifted dramatically: “The traffic ratio now is for every 18 pages that Google takes from you, you get one visitor.” This week, Pew added its own data to the mix:

Users who encountered an AI summary clicked on a traditional search result link in 8% of all visits. Those who did not encounter an AI summary clicked on a search result nearly twice as often (15% of visits). Google users who encountered an AI summary also rarely clicked on a link in the summary itself. This occurred in just 1% of all visits to pages with such a summary.

Given that AI summaries are both a feature and a preview of the general direction of Search — you can think of them, as well as AI Mode, as tests for a more complete redesign to the core product, that 1 percent figure really sticks out. Google really is burying the web. After this week’s earnings report, Google chief business officer Phillip Schindler explained why the company was doubling down. AI Overviews “continue to drive higher satisfaction. They continue to drive higher search users. They’re scaling up very nicely,” he said, giving the company a “really strong base on which we can then innovate and drive actually more innovative and new and next-generation ad formats.” As AI features claw back traffic, they’re driving search growth, in other words, which Google is pretty sure it can monetize more than it already does.

This dynamic gets a lot of attention in part because “the web” encompasses a great deal of conversation about what the company is doing, not just in the commercial media but on forums like Reddit; in hindsight, it may end up being a marginal story in the development of a much more expansive and weirder online world. But it will also be an instructive one. In the same earnings call, Pichai was more candid than usual about what an AI-forward Google might mean for its partners, or for the many parts of the economy with some adjacency to Google:

Just like the early days of the web, there are aspects about it that will expand access, grow the use cases, etc. And I think those elements are there. But I do think it’s important. It’s not just a technology claim, but we have to solve the business models for the varying players involved.

This was in response to a question that mentioned so-called agentic AI, meaning tools that are intended to carry out tasks on behalf of users. In Google’s vision of the future, the company’s chatbots won’t just mediate searches, but interact with a much wider range of businesses, whether it’s e-commerce or travel or through tasks done for work. It’s a broader version of a familiar relationship: Google amasses a bunch of partners, sends its users around to interact with them, and collects its fares along the way. A similar arrangement helped expand and commercialize a web that was relatively small when Google first got started; perhaps a do-it-all chatbot assistant will create similar opportunities online and off. If it does, though, Google — and other companies now pursuing similar models — will accrue incredible leverage and power. At some point, like last time, it might just decide to use it.

• Dating Apps Are Struggling to Reinvent Themselves
• Why You Are Reading Reddit a Lot More These Days
• Trump Hates Electric Cars, So They Are Very Cheap — at Least for Now

See All