Interview. Eric Seufert on Whether AI Will Destroy Google's Search Monopoly

Drew Cohen (0:06)

Hello, and welcome to The Synopsis, a podcast for professional investors. I am really excited for our conversation today with Eric Seufert, who is an independent analyst and creator of Mobile Dev Memo. He writes a lot about the ad tech ecosystem. In fact, when I was at Capital Group, he was the expert we often called on to figure out more about what was going on in ad tech. So Eric, welcome.

Yeah, good to see you.

Eric Seufert (0:37)

We were just talking about the time that you very graciously brought me out to Palo Alto, to the Four Seasons. We had a big dinner there. It was a very nice event. So it's been a while since we've seen each other, but good to see you.

Drew Cohen (0:52)

Yeah, and I'm excited to talk today, and kind of the beginnings of this podcast was, there was one of the past podcasts we had, we talked a little bit about Google Search and some of the, we'll say challenges facing Google Search, and you kind of had your own thoughts on that. So just to kind of set the stage a little bit before we get into it.

Right now, Google Search, as we all know, one of the greatest businesses of all time.

Very high-margin business, very scalable, and it is ubiquitous. Something that has been changing potentially is the rise of AI Chat. So there's a few different sort of things that could potentially change for Google Search alongside the rise of AI Chat. One is just that now there are new competitors, new interfaces for people to potentially go to, instead of traditional Google Search, which could become disruptive later on. But then second, there is also the form factor of search changing, as it becomes more conversational, and maybe the ability of advertising to be injected in, changes to the negative for Google. So I just want to set the stage right there and get your thoughts on what you think about the changes happening to Google Search R, and where you think it could go in the future.

Eric Seufert (2:14)

Well, this is a favorite topic of mine. So I wrote a series called Google's Gambit, right? And I want to say the first entry in that, I mean, it would have been sometime in late 2024 or 2025 And so this was when pessimism about Google with respect to the kind of changing paradigm of chat-based, sort of natural language-based, chatbot-based interaction models for content discovery was at the fever pitch, right? I mean, Google was just seen as a victim of ChatGPT, and it was going to be just overtaking completely, searching to be overtaking completely by this chatbot paradigm. And I said, look, here's what seems to be happening. Google is capable of navigating this. I mean, I think in general, and I mean, this is like painting with a very broad brush here, but Google is seen as this kind of like very staid, sclerotic organization, very slow moving, you know, not very flexible.

And maybe that characterization is fair in some respects.

But Google did seem to be adapting to the moment, right? And so, you know, what they had announced was AI Overviews, where they were going to sort of take over the above-the-fold space and search with an LLM generated overview of all the content that you otherwise might have navigated to. And I remember at the time, I called this like, it was in the very early stages of this. I don't even remember if they had launched it, maybe they just announced it. But like I said, look, they have this ability to adapt to this moment and to execute this total ship of theses transformation of the search experience. There's no reason why they don't have the right to win that interaction format, right? That interaction model. There's no reason why they don't have the right to win. Now, if they can't execute well, well, then they won't. But there's no reason why they don't have the right to win that. In my sense, and I track the progress of this as it's evolved, and my sense is that they did, right? Now, that doesn't mean that ChatGPT can't become popular. It is. It's a billion wow, right? So it's a very popular product. That doesn't mean that other chatbots can't become popular and see a lot of usage. But my instinct at the time, and I think this is proven out, was that Google could adapt to that moment, and they could transform the search experience into what I called a distribution mechanism to a content sync, right? So to take all of that engagement that they used to funnel out of the search experience, which is the whole point of search. The search did a good job if it got you off of the page without having to click multiple times or refine the query, or go through to the second page. Search did its job really well if you clicked that first link.