Companies leading the artificial intelligence (AI) market are introducing AI-based web browsers (internet search engines) to seize the search market dominated by Google, but Google's stronghold shows little sign of breaking down. In fact, Google's search-related revenue recorded double-digit growth in the second quarter of this year. The concerns that AI chatbots, including ChatGPT, will gradually replace traditional search engines have proven unfounded as Google search continues its solid growth trajectory.
According to the industry on the 29th, Alphabet, Google's parent company, recorded its highest-ever quarterly revenue of $54.19 billion (about 75.4 trillion won) in its search institutional sector for the second quarter of this year (April-June), marking an 11.7% increase compared to the same period last year. Earlier, the market had anticipated that as more people began asking AI chatbots their questions instead of using Google's search bar, Google search would take a hit, but it is analyzed that Google managed to retain its leading position in search by utilizing AI for defense. As of May, Google's global search market share stood at about 90%.
Google is responding to corporations enhancing their search functionalities by equipping its search tools with AI. A representative feature is the 'AI overview.' The AI overview summarizes search results and displays responses generated by Google's AI model 'Gemini' at the top of search results. Sundar Pichai, Google's Chief Executive Officer (CEO), noted, "The AI overview has surpassed 2 billion monthly users across more than 200 countries and regions." This represents a significant increase of over 500 million compared to 1.5 billion in the previous quarter.
In May, Google launched an 'AI mode,' a conversational search feature that provides more in-depth answers, in response to AI chatbots. Soon, it is expected to introduce 'Deep Search,' an advanced search tool, along with more personalized customized response features. Last week, it launched the 'Web Guide' feature, which groups search results by topic. The Web Guide provides personalized search results based on Gemini, whereby entering a query such as 'solo travel to Japan' will first categorize related results into transportation, accommodations, food, travel tips, etc., with related links listed below.
Currently, Chrome, which accounts for about 70% of the global web browser market, is undergoing integration with Gemini.
The Wall Street Journal (WSJ) diagnosed that "Google's search engine is successfully defending itself against challenges from competitors like OpenAI" and that "Alphabet's better-than-expected search institutional sector revenue for the second quarter shows that Google is still successfully monetizing search traffic." This is a result of Google mobilizing enormous financial resources and technology to enhance search performance and launch various search functions.
Experts have evaluated that while more people are using OpenAI's ChatGPT or Anthropic's Claude like search engines, generative AI has not fully replaced Google search due to its inherent limitations, such as the unique phenomenon of 'hallucination.'
However, some opinions suggest that it is still too early to be reassured. Some argue that as AI chatbots and AI web browsers are still in their early stages of release, their impact is not significant yet, but in the long run, they could change how users search for information, potentially eroding Google's search market share. It has been reported that ChatGPT is processing about 2.5 billion queries per day, which is nearly 18% of Google's average daily search volume of 14 billion.
On that day, Microsoft (MS) launched a pilot version of the 'Copilot mode,' which integrates the AI model 'Copilot' into its web browser Edge. The main interface is an AI web browser with a chat window similar to ChatGPT. Previously, AI startup Perplexity introduced the AI web browser 'Comet,' and OpenAI, the developer of ChatGPT, is also preparing to launch its web browser, having hired two vice presidents who were early members of Google Chrome development last year.
Unlike the traditional search method that lists only relevant websites when users search for specific information in the search bar, the AI web browser directly summarizes search results and provides answers. The reason corporations are focusing on AI web browsers is not only because they can secure advertising revenue through search but also because it represents the first step in implementing AI agents (AI assistants), which are expected to grow rapidly in the future. AI agents integrated into AI web browsers could assist users by automating daily tasks such as conducting searches, drafting emails, and organizing schedules.
Big tech companies like Google and MS, which already have web browsers, are considered to have the advantage in competition since they only need to integrate AI into their existing browsers. AI startups like OpenAI, Anthropic, and Perplexity, which have undertaken the development of AI browsers as latecomers, face significant pressure to establish a foothold in the market. According to web analytics company StatCounter, as of June this year, the global web browser market share stood at 66.49% for Google Chrome, 13.07% for MS Edge, 7.37% for Apple Safari, 5.86% for Firefox, and 2.65% for Opera.
A source in the tech industry said, "If Perplexity or OpenAI manage to secure a revenue model utilizing AI web browsers in the future, cracks may appear in Google's search market monopoly. However, so far, Google, a traditional search giant with sufficient capacity for continued investment in AI, occupies a favorable position." After announcing its second-quarter earnings, Google said in a conference call that it would increase its capital expenditure from the previous $75 billion (about 104 trillion won) to $85 billion (about 118 trillion won) this year. A significant portion of that expenditure is expected to be invested in AI technology and infrastructure.