[Second in a series, first post here]
This past week, Wall Street caught up with the rest of us and realized that Google has lost its monopoly grip on search. The trigger wasn’t Google losing an anti-trust case – that happened last summer. Nor was it the first ten days of Google’s ongoing search remedies trial. Instead, it was a statement just two days ago by an Apple executive, Eddie Cue, which led to an almost instantaneous panic amongst investors.
Cue told the court that consumers’ preference for using AI agents had led to a decline in search traffic inside Apple’s Safari browser (Google pays Apple more than $20 billion a year to secure that traffic – a major focal point of the government’s case).
Cue then twisted the knife: A decline in Safari’s Google traffic, he said, “has never happened in 22 years.”
A near perfect storm of “never happened” has settled over Google this past year: Twin rulings labeling the company a monopolist, a 10 percent annual decline in its stock compared to a 10 percent increase in the NASDAQ index, and the rise of generative AI as a replacement for search, the first significant competitive threat to the company’s 25-year run as the dominant force in how humanity asked questions of the world.
Poor Google. The company finds itself in the unenviable position of IBM and AT&T in the ’70s and ’80s, or Microsoft in the early 2000s. It’s become an industry titan beset by government antitrust actions that hobble its ability to respond to fundamental and permanent market changes.
What on earth can Google do? Well, I’ve got good news for the company: There’s a way out, but it’s going to hurt a little.
***
To understand the actions Google might take to ensure its continued membership in the Magnificent Seven, it’s worth taking a step back and studying Microsoft. Throughout the ’90s, Microsoft led the “Four Horsemen” – blue-chip tech stocks which drove unprecedented market returns during the first Internet boom (the four were Microsoft, Intel, Cisco, and Dell, if you can believe it). But by 1999, Microsoft was ruled a monopoly just as the center of the technology industry shifted from desktop PCs to a mobile-centric world built on top of the Internet.
For nearly two decades, Microsoft had dominated tech. Its Windows operating system captured north of 90 percent market share. Windows was the world’s #1 consumer-facing technology brand – the face of an industry. But once Microsoft settled with the US government and ended its five year anti-trust fight, the company’s brand, stock, and fortunes began a decade of decline. Founding CEO Bill Gates stepped down, and in a disastrous strategic misstep, newly installed CEO Steve Ballmer doubled down on the company’s past by putting Windows at the center of everything the company did. Here’s the Wall Street Journal’s summary of the Ballmer era, a piece written as incoming CEO Satya Nadella was preparing to take the reins:
“In many cases, Microsoft latched onto technologies like smartphones, touchscreens, ‘smart’ cars and wristwatches … long before Apple or Google did. But it repeatedly killed promising projects if they threatened its cash cows [Windows and Office].”
Let’s update that paragraph, written in 2013, for present-day Google:
“In many cases, Google latched onto technologies like artificial intelligence long before Apple or OpenAI did. But it repeatedly killed promising projects if they threatened its cash cows [Search and Advertising].”
The lessons of Microsoft don’t end in 2013 – in fact, the company subsequently managed one of the most impressive turnarounds in modern business history. Acknowledging Ballmer’s mistakes, Nadella deprioritized Windows and focused Microsoft on a decidedly less sexy but far more rewarding market: Enterprise infrastructure. By 2020, Microsoft was once again one of the most valuable tech companies in the world. Windows still existed, but as tech analyst Ben Thompson declared, it was no longer a driver of Microsoft’s business. Microsoft is now a leader in cloud-based infrastructure – an arms merchant selling highly profitable services to any and all comers.
***
Might Google learn from Microsoft’s stumbles and subsequent pivot? Indeed. As I hinted in my last post, it’s time for Google to release its death grip on consumer-facing search, and embrace a future where its cash cow becomes a commodity driving a new ecosystem of innovation. In that post, I wrote:
Google should make the database of intentions freely available to anyone who wishes to license it.
In the remedies phase of Google’s search trial, which wraps today, the government has already demanded that Google share its core search data with any and all comers. Google has responded by taking to the fainting couch, declaring that such a remedy would “allow anyone to completely reverse engineer, end to end, every aspect of our technology stack.”
But would that really be so bad? At the end of my last post, I promised to lay out why Google sharing its search data could be a net win for not only Google, but the entire tech industry, and by extension, the world. Here’s my step by step guide:
Step 1. Negotiate a settlement with the government that embraces Google’s sharing of search data. If it acts quickly and keeps a long view, Google could negotiate the right to both charge market rates for its “search as a service” – which should bring in handsome profits – while continuing to offer its current search services (including Gemini AI). This would allow Google to continue to milk its consumer facing search application while also profiting from new applications built on top of its core search index and data.
Step 2. Design and launch a technology platform that delivers search as a service to qualified developers around the world. This platform would give partners access to Google’s search index in real time, and let them build whatever they chose to build on top of it. Like Microsoft, this would position Google as an arms merchant, selling high quality commodity search to all comers. Platform policy should include bi-directional data sharing, such that new services that leverage Google’s index would share engagement data back to the Google service, federating incremental improvements across all partners in the ecosystem.
Step 3. Boldly, loudly, and confidently begin to tell a new narrative about Google’s future. Just as Microsoft was once a “Windows” company but moved past its history to become an enterprise winner, Google is evolving beyond search to become a neutral platform company that is accessible to all. It already has a robust asset to drive that journey in Google Cloud Platform, and this move will supercharge that business. Now the company will be single handedly responsible for unleashing a data asset – literally the database of intentions – that will create thousands of new companies and services, and with that tens of thousands of new jobs across the technology ecosystem.
Step 4. Continue to run and improve Google’s current search and AI services on top of this new platform. Wall Street hates abrupt change, and it’ll take years for AI and chatbots to eclipse traditional search in terms of revenue and profit. Don’t worry, Wall Street! Just as Microsoft kept selling Windows and Office, Google will keep selling search too.
Step 4. Imagine and build new services to compete on top of its own services. With consumer search – owning the customer at the interface layer – no longer the future of Google, Inc., the company will be free to compete with OpenAI, Perplexity, Kagi, and the thousands of new startups that will undoubtedly spring up once Google’s core search service becomes available as a platform. Instead of exhausting itself attempting to build a walled garden around search (and awkwardly shoehorning Gemini into its increasingly unwieldy core service), Google will be once again be a place where big ideas and crazy moonshots can be taken at scale.
Will this work? Of course there are obstacles, but I think it could. And it certainly sounds like a more appealing future than one of constantly defending yesterday’s business model of walled gardens and fealty to advertising economics. In one bold move, Google could unshackle itself from government oversight as well as a mirthless, spiraling death loop of enshittification.
In the end, Google turning search into a service would benefit the world in a way that would once again position the company as an innovator driving value across all of society – kind of like it was when I wrote The Search 20 years ago. Let’s face it: Google search has gotten pretty shitty over the past 20 years – and everyone’s noticed. If we’re headed into a world where AI chatbots become our interface to knowledge, the next generation of Claudes, Bings, and ChatGPTs will desperately require a high-quality search index that they, and we, can actually trust. That index could and should be Google’s. But only if the company has the courage to let go of its past.
—
Special thanks to the folks at Kagi, and in particular this blog post, which lays out the case for Google to share its database of intentions.
2 thoughts on “How Google Can Win the Future”