Mirror Review
May 12th, 2025
A significant tremor went through the financial markets recently when an Apple executive, Eddy Cue, suggested that the landscape of online search is changing, and fast. His testimony during the U.S. antitrust case against Alphabet indicated that Google searches on Apple’s Safari browser had seen a decline in volume for the first time in over two decades. Cue pointed at the rise of new AI-driven tools, suggesting that AI Chatbots are eroding Google Search business as users find new ways to seek information.
The Immediate Fallout: Numbers Don’t Lie
When a high-ranking executive from a company like Apple speaks, people listen – and so do the markets.
- Following Cue’s comments, Alphabet’s stock price took a significant hit, dropping by as much as 9% in intraday trading. While it has recovered some ground, it remained about 6% lower than before the testimony.
- This nervousness stems from a core concern: Google Search is king within Alphabet, accounting for a staggering 55% of its overall revenues. Any threat to this cash cow is a serious matter.
- Google, in response, stated, “We continue to see overall query growth in Search. That includes an increase in total queries coming from Apple’s devices and platforms.” This suggests that while Safari-specific searches might be down, overall search on their platform, including through their own app and Chrome browser on Apple devices, is still growing.
- However, independent data paints a more nuanced picture. Web analytics firm Statcounter showed Google Search’s global market share dipping from around 93% to just under 90% since OpenAI’s ChatGPT burst onto the scene in late November 2022. Alarmingly for Google, this is the first time it has fallen below the 90% threshold since 2015.
4 Reasons AI Chatbots Are Eroding Google Search Business
So, what’s really causing this shift? It’s more complex than a single factor, but here are some key drivers:
- Changing User Habits & Direct Answers:
Users are increasingly turning to AI chatbots for quick, direct answers rather than a list of links. Tools like ChatGPT provide information synthesised into a conversational response.
Google itself is leaning into this with “AI Overviews,” which provide capsule answers.
This trend has prompted many entrepreneurs to explore how to add a chatbot to a small business website to better meet user expectations for instant, AI-powered assistance. While Google claims this increases search usage, the nature of interaction is fundamentally changing.
- Competition Steps Up:
Microsoft’s Bing, by integrating OpenAI’s GPT models into its search and offering its own Bing chatbot, has seen a small but notable uptick in market share, moving from about 3% to 3.9%. This indicates that AI integration is a competitive advantage.
- Specific Search Types Migrating:
Certain types of queries, particularly those related to “math and homework,” have seen a decline on Google since the debut of ChatGPT, as testified by Google executive Sissie Hsiao.
While these may not be the most lucrative ad-revenue searches, it signifies a behavioral shift for specific information needs.
- Decline in Click-Through Rates:
The move towards AI-generated direct answers, even Google’s own AI Overviews, could be impacting a crucial metric: click-through rates.
JPMorgan analyst Doug Anmuth noted, “We believe AI Overviews are a factor in slower paid click growth as they likely have lower ad load & more relevant natural search results.”
Studies from marketing firms even suggest potential fall-offs in click-through rates for AI Overviews by as much as 35% compared to traditional search.
The Broader Impact: Market Share and Monetization Jitters
The ground is undeniably shifting. While Google insists its overall search volume is up, its slice of the pie might be shrinking.
- Data from SimilarWeb also indicated a 2% decline in market share for Google year-over-year and showed traditional search engines, in general, losing traffic – a strong pointer that users are indeed turning more to AI tools.
- Interestingly, among the new AI tools, SimilarWeb’s data from 2024 showed ChatGPT dominating with about 80% of total AI chatbot usage, while Google’s own AI tools held about 5.6%.
- Furthermore, younger demographics, particularly Gen Z, are increasingly using social media platforms like TikTok or Instagram as their primary search tool for certain queries, like product or travel recommendations, further fragmenting the search landscape.
On the revenue front, while Google Search revenues grew 7% in the first quarter, this was about half the rate at which they expanded throughout 2024. And perhaps more tellingly, Alphabet’s SEC filing revealed that the growth of its “Google Search & Other” paid clicks had slowed to 2%, a drop from a 5% growth rate throughout 2024.
Philipp Schindler, Alphabet’s Chief Business Officer, mentioned that monetization has remained at “approximately the same rate” since the launch of AI Overviews, but notably sidestepped questions about click-through rates.
Google ad chief Vidhya Srinivasan seems to acknowledge the challenge internally. According to notes from an October 2024 meeting introduced at the antitrust trial, Srinivasan was pushing for ads in Gemini AI chatbot answers, reportedly saying, “The writing is on the wall,” regarding the potential for generative AI to cannibalize Google Search revenue.
What’s Next in the World of Search?
Alphabet is far from being in immediate peril. It’s still the dominant force in search and has a diversified portfolio with YouTube and its Cloud business. The company is actively integrating AI into its core search product with AI Overviews and developing its own powerful AI models like Gemini.
However, as Eddy Cue’s testimony highlighted, the clock is ticking. The rise of AI presents an “innovator’s dilemma” for Google: how to embrace a new technology that could potentially undermine its primary revenue stream.
While “AI Chatbots are eroding Google Search Business” is not a fleeting headline, it represents a fundamental evolution in how we will find and consume information.
Google has the resources and talent to navigate this change, but the path ahead will require bold moves and a willingness to adapt in a landscape that is being reshaped by artificial intelligence at an unprecedented pace.
The next few years will be critical in determining if the search giant can maintain its dominance or if we’re witnessing the dawn of a new era in information discovery.
