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Weekly Research and Commentary on the Future of Business and Technology.

What They’re All Searching For.

Apr 9, 2024

In last Friday’s edition of the Weekend Briefing (which, if you didn’t read, what are you really doing with your weekends?), Pascal flagged a very of-the-moment drama that I’d like to unpack a bit here to see what the dynamics at play in the Gen AI / Search / Publishing crisis can tell us about disruption and the fight for sustainable relevance.

The background here is that AI-augmented or smart agent-mediated search threatens to upend a business that has been very stable and immensely profitable for one dominant player—Google—for decades. Rather than the traditional search model of linking users to information out on the web (while serving up loads and loads of ads), AI-augmented search promises to serve desired information up directly in a handy and highly curated synthesis. The potential implications of disrupting something as foundational to the web, e-commerce, and daily life as search are massive, and the strategic positions in which the key players in this drama find themselves are commensurately fascinating—and perhaps instructive for the future too.

In what might be the most straightforward position, we have the upstarts—firms like Perplexity AI. They’re fighting to get into the game, and if they succeed, it will likely be because of the specific benefits that insurgent status confers: narrow focus, clarity of mission, an org and teams that were built to do exactly what they’re actually doing right now, and a general freedom from legacy infrastructure and competing priorities. Perplexity’s CEO summed up the advantage of being the upstart in a conversation with the NYT earlier this year: “What makes me confident is the fact that, if they [Google] want to do it better than us, they would basically have to kill their own business model.”

Google, then, isn’t fighting to get into the game. They’re fighting to stay on top as the game changes. And make no mistake: they’ve been pushed into this fight to reimagine search—which has remained wildly profitable for them even as the experience has degraded over the years. Now, Google has the benefits of decades of dominance—nearly inexhaustible resources and the luxury of being virtually synonymous with search & discovery—but also finds itself managing a set of tensions that aren’t part of the strategic calculus for a Perplexity or Anthropic.

Google has a search business that it still isn’t in a rush to cannibalize. It has a reputation and is perhaps held to a certain standard for performance. It also has a diverse set of stakeholders to please—notably including information-hungry users on one hand and traffic-hungry publishers, e-commerce sites, and ad buyers on the other. The fact that Google is reportedly considering charging for AI-augmented search while still publicly maintaining that the company is “not working on or considering” an ad-free search experience suggests that they’re trying to figure out how to win the new game while not losing the old one.

That’s a difficult position. But if you have to choose a challenge, it’s probably better to be fighting for dominance than fighting for relevance, which is where publishers are finding themselves now—and where a much wider swath of companies that depend on search to drive traffic and revenue may find themselves in the future. Publishers aren’t fighting to get into the game or win it; they’re fighting simply to stay in the game. For many of them, the outlook is grim and the game existential. Perhaps the best thing that can be said is that some seem to have realized an essential truth about weathering disruption: it’s not a one-shot deal where the “solution” will come down to identifying the right pivot to make, making it, and then leaning back as the money pours in again. Rather, the fight for sustained relevance (the thing that all organizations are searching for in the end) is going to be won with a both/and embrace of agility and resilience—a combination of strategies for navigating a changing game and strategies that endure while the game inevitably continues to change.

However the AI / Search / Publishing game evolves, we should all be watching the players intently and learning. If any outcome here is relatively certain, it’s that many more firms will be drawn into a similar game in the near future.