Google’s Worst Nightmare as Competitor Raises Money

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By Douglas A. McIntyre Published

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  • Google’s position as the world’s premier search product may be about to end.

  • Threats it faces include AI, a government probe, and a new competitor.

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Google’s Worst Nightmare as Competitor Raises Money

© Prykhodov / iStock Editorial via Getty Images

Google has been the premier search product in the world since 2000, when its market share soared. Its share of global search is close to 90% today. That may be eroded, and the erosion may be fast.

Threats to Google

JHVEPhoto / iStock Editorial via Getty Images

Google has acknowledged that artificial intelligence (AI) is a threat to its search dominance. It has begun to test an AI search function on its homepage, but among a small number of test users. Management at Alphabet Inc. (NASDAQ: GOOGL | GOOGL Price Prediction), Google’s parent, needs to deal with the fact that ChatGPT dominates the AI software business, at least among consumers. There is a new version of ChatGPT labeled “ChatGPT search.”

Among the AI companies, one has taken direct aim at Google. Perplexity has just raised $500 million, which puts its valuation at $14 billion. That contrasts with Alphabet’s $1.94 billion.

According to The Wall Street Journal, “Instead of the list of blue links users have long seen on Google, Perplexity offers answers in sentence form with links to the websites it pulls information from.” Perplexity may launch its own browser.

One challenge Google faces could help Perplexity soon. The U.S. Department of Justice has launched an investigation that resulted in a victory of the claim that it is a monopoly. The U.S. District Court for the Eastern District of Virginia issued a statement that the search engine “harmed Google’s publishing customers, the competitive process, and, ultimately, consumers of information on the open web.”

The Justice Department wants to break up Alphabet by spinning out its Chrome browser. It has a 65% share of the global browser universe. Chrome is the company’s largest platform to get people to use its search function. It also has distribution deals with Apple and Samsung.

A breakup would sting Google’s business. Its search market share currently dwarfs the industry’s second-place Microsoft Bing product. Bing may not be a good enough product to take advantage of the Justice Department’s plan.

If Perplexity offers a product as good as Google’s search features, it will injure Google, whether Alphabet breaks up or not.

How to Make Money on a Google Breakup

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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