Category: Media/Tech Business Models

Last month Google announced the most significant change to its search product since its launch in 1998. Its iconic search box, which I’ve long compared to a command line for the Internet, has been redesigned to incorporate multi-modal chatbot capabilities. In essence, Google is no longer going to send you off to the best possible destination for your query. Now it’s built to capture your input and convert it into answers (and actions) all in one place – on Google.com.

Google’s announcement was expected – the company had to compete with the new paradigm of “answer engines” from OpenAI and Anthropic. But when the shoe did drop, my inbox filled with trepidation. Google has been the beating heart of the Internet’s circulatory system. Now that it’s evolved into a self-contained walled garden, how will the open web survive?

I’ve read every hot take and every second-day analysis of Google’s move. They all point to the same conclusion: As Casey Newton put it, the web is being “summarized to death.” Sure, there’ll still be websites, but the grand bargain with Google – free content for free traffic – is over. Google has  enclosed the entire world wide web and turned it into a walled garden which it alone can monetize.  As Enrique Dans put it over on Medium, the web is no longer a destination, it is merely “raw material.”

But there’s a nagging question lurking in all this hand wringing. Google’s search service, as well as LLMs like Gemini, ChatGPT and Claude, are all built on the back of the web’s open architecture. For two decades, the grand bargain insured that at least some of the economics flowed back to the people who created those sites in the form of traffic, which could be converted into advertising, subscription, and other forms of remuneration.

If Google encloses the web and starves it of oxygen, won’t that ultimately prove bad for Google itself?

I posed just that question (see screenshot, above) to Google’s new AI search feature. It dutifully came back with four categories of answers:

1. Embedded AI Advertising – “As users rely on AI for direct answers rather than clicking links, Google integrates advertising into the AI generation process.”

This is already well underway. Put another way, Google will create ads on the fly on behalf of its customers (the advertisers), and surface them directly inside the AI search experience. Think Instagram, but in search. Yay!

2. The “Walled Garden” Ecosystem. “Google doesn’t need an open web if it owns the environments where users spend their time.”

Yep. Pretty much the flip side of #1.

3. Enterprise Infrastructure & Licensing. “Google’s monetization is diversifying beyond advertising, transitioning into a massive tech-infrastructure and subscription company.”

True, but advertising is still king.

4. Proprietary Data Monopolies. “Rather than crawling independent websites, future web experiences will increasingly rely on proprietary licensing deals and AI agent-to-agent interactions.”

Now this is where it gets interesting. To feed their increasingly ravenous AI maws, Google (and other contenders like Anthropic and OpenAI) are paying up for “raw materials” to ensure their products have fresh and accurate information. This is a “business development first” approach to information: aggregators who have captured our attention will decide which information suppliers are worthy of ingestion. Those suppliers are then relegated to a fixed-margin business at the mercy of their upstream overlords.

Is this sustainable? Is it good for a free and open society that demands quality information to thrive?  It certainly doesn’t feel that way to me, or to nearly anyone who’s thinking deeply about an information ecosystem absent the level playing field that Google search used to provide.

“I don’t think anyone really knows what this means,” wrote Benedict Evans in his May 26th newsletter. Sadly, I concur.

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