Will OpenAI’s ChatGPT Kill Google?

over the last few days of my eyes new chip gbt has been making headlines and it's probably hard to overestimate how much artificial intelligence is going to change our lives and the economy so I asked of my eyes chatbot whether the recent developments of open AI represent a threat to alphabets so Google's Core Business Google search which as of September 30th represents around 60 percent of alphabet's total revenue and according to the chatbot open AI is not a threat to search engines but honestly I don't agree with the chat box response and I do think that chatbots have the potential to make Google search obsolete so is of May Ice chatbot really going to kill Google's core business or does Google have some advantages too that may help the business depend off some of the new competitors this will be the topic of today's video and so without further Ado let's get started foreign [Applause] is an area that is dominated by Google search which runs around 99 000 search queries per second which adds up to a whopping 8.5 billion searches per day which again represents a market share of around 92 percent over the last nine months of Google's 2022 fiscal year for example the business generated 120 billion US dollars in Revenue just from search but this business is possibly about to be disrupted by a new technology namely Ai and large language models that can read summarize and translate text and predict future words in a sentence letting them generate sentences similar to how humans talk and write so let me just show you a couple of examples that highlight why chatbots like old May Ice chat GPT might actually represent a very real threat to the business Behemoth Google and yeah it's Google search division for instance when you ask the chatbot to create a detail held one week travel plan to Paris for someone who loves French food and who wants to stay in a four-star hotel you get the following response I think the result is pretty damn impressive the is no need to Google for restaurants no need to Google for hotel suggestions and the central pillars of your trip are basically planned and this was done within 5 seconds I then asked it can you recommend a particular Cinema in Paris and tell me how it can get there from my hotel using public transportation systems and again the results make Google almost obsolete as I don't have to filter through lots of different links that may be provided by Google and just get a very concise recommendation by the openai chatbot instead and although the chatbots results are not always perfect and sometimes false information is yeah presented with a high degree of confidence by the bot itself which also Bears its risks I think improvements over time are inevitable now personally I find the chat GPT chatbot so useful that I already asked my iPhone to create an app for it that is now located on my phone's home screen and I found myself use using chat gbt instead of Google multiple times a day already for instance I recently had a debate with a friend about the right amount of carbohydrates per day and whether carbohydrates are bad and instead of yeah Googling for some arguments I just asked the chat GPT to write a short scientific essay that outlines why carbohydrates aren't as bad as they are maybe sometimes yeah presented as in the media especially for young male athletes and I can think of many more use cases ranging from yeah quick tutorials for example how do I fix a dripping shower head to more conceptual requests why should I buy the iPhone 14 instead of the iPhone 13 to productive requests like writing or fixing code or writing block entries on topics X Y or Z so are we witnessing the start of a rising competitive intensity in search for the first time in the last few decades basically arguably it is not only the open AI that has the potential to Dethrone Google no Microsoft the tech Behemoth recently announced its Ambitions to launch a so-called super app that combines shopping messaging web search news feed and other services in one single app like WeChat in China now I do have a couple of thoughts on the threat that old may I in particular may represent for Google that I want to share with you today so I think to understand why the open AI chatbot is a threat to Google's Core Business first of all you have to understand how Google makes money on Google search simply put I would say Google makes money primarily through advertising and more specifically performance-based advertising at least for the most part this means when people use Google to search for something online the search engine might display ads that are related to the search term businesses can actually Target specific locations languages and audiences and they pay Google to display the ads mostly on a pay per click basis meaning businesses only pay Google when someone actually clicks on their ad now the problem with a chatbot like chat gbt is that there are no longer links the quality of the answers of yeah the chatbot is on average of higher quality and more time efficient than yeah when you Google something and then have to yeah basically fight your way through the various links that are provided by Google and I think this creates a problem because of course you could argue that Google could just copy what chat GPT does and integrate it into their own Services just like Facebook for example has copied features like stories from Snapchat or similarly Microsoft has been copying solutions from competitors like yeah for instance slack or Zoom for decades however if there are no links there is no monetization or maybe one can figure out some form of monetization for search results like the ones provided by a chatbot but the monetization possibilities may be less attractive now if we do assume that the results of a chatbot are harder to monetize this puts Google in a difficult position and a dilemma sure Google is already spending billions on AI and its AI business division deepmind has actually come up with numerous programs that outperform humans and games like go Starcraft or Stratego for example and they even solved a 50 year old protein folding challenge moreover they are also into autonomous driving with way more and and their latest annual report they actually outlined that they are exploring options to make use of AI in search too quote unquote we are currently experimenting with multitask unified model capabilities to make searching more natural and intuitive and even enable entirely new ways to search so maybe based on their AI know-how copying the functions of chat gbt may not be that hard although to be honest I really don't know I would assume that opme I probably has a major Head Start in this area but then again Google has access to so much data that yeah this probably them a slight Edge too but even if they could copy it I think monetizing the search results is harder than the Gap traditional Google search business and then Google would basically cannibalize its own search business which as of now as we've shown in the beginning of the video represents the majority of their profits and we do know that businesses are often reluctant to innovate if yeah this will kill their traditional Legacy business and I think this is actually expressed in the so-called innovators dilemma which is a concept developed by Harvard Business School Professor Clayton Christensen and it refers to the situation where a successful company is facing a new market or yeah technological challenges that resist to change and continues to rely on its established strategies and products even as they become less effective because as I just said this old strategy is generating the majority of profits so long story short Google has probably more to lose than to gain here and even though Google's valuation is already somewhat depressed especially relative to the Stock's history if the AI disruption narrative gains traction there's probably some downside with the Stock's current valuation left now the pull case on the other hand might be that search results from a chatbot may actually be monetized at an even better rate because the chatbot could offer you just the best paid option when looking for a hotel in Paris for instance and for the user it may be very hard to tell that there is an ad in the first place so in a way it could blur the distinction between paid and non-paid search results and this may actually be a net positive with Google in in its current form for example personally I almost never click on the first Yeah couple of results which are paid ads yeah and so as I just said a chatbot might actually be an positive when that distinction between paid and yeah not paid search results yet becomes more blurry now full disclaimer I own Google and I'm not going to sell my Google Shares here I think Google is a reasonably Diversified business even though search represents the majority of Google's revenue but they also possess other valuable businesses like Google Cloud YouTube or Android to name just a couple of examples what I'm going to do is I will observe a situation very carefully I will observe whether people form a new habit here will they start chatboting something instead of quickly Googling something now what's important to mention here is that in 2010 and 2011 when Apple launched Siri people also thought that theory represented a major threat to Google search around 10 years later we know that Ziri couldn't really Dethrone Google search so the habit formation that is what I will actually obsessively focus on from now going forward because this so the habit of Googling may actually be Google's strongest competitive Advantage maybe chat GPT has the potential to be better at yeah I would call it a subset of search queries and people will use it mainly for knowledge based search queries while the more valuable search queries in terms of AD Revenue like when for example someone is looking for a hotel for a specific lawyer a fund manager or a mortgage lender those search queries might might still require a link and will therefore remain on the Google search platform alright to learn more about how chat GPT may actually influence the world of investing I recommend you watch the following video next take care

Channel: René Sellmann

Views: 134,326

Keywords: chatgpt explained, chatgpt3, chatgpt, openai chatbot, openai gpt 3, openai chat, openai gpt, investing in artificial intelligence, openai investment, investing for beginners, investing in stocks, artificial intelligence, chat gpt 3.5, open ai investing, openai google, openai threat google, chatbots google, google stock analysis, google stock predictions, alphabet stock, google ai, google artificial intelligence, google search, google search engine, chat gpt google, google

Id: HnY8ionyRSs

Length: 11min 21sec (681 seconds)

Published: Sat Dec 10 2022