OpenAI’s ChatGPT is making significant inroads into Google’s search market dominance, according to new data from brokerage firm Evercore ISI. In a recent survey of 1,000 respondents, ChatGPT emerged as the top search provider for 5% of users, up from just 1% in June – a fivefold increase in just a few months. Meanwhile, Google’s market share slipped from 80% to 78% during the same period, though it remains the overwhelming leader in online search.
Millennials are driving ChatGPT’s adoption, with younger users particularly embracing the AI-powered search alternative. The shift comes after OpenAI launched a full search feature for ChatGPT at the end of October and secured a prominent deal with Apple that integrates ChatGPT into many iPhones – both moves representing direct challenges to Google’s longstanding dominance.
The survey revealed ChatGPT outperformed Google in several key categories, including helping people learn specific skills or tasks, assisting with writing and coding, and boosting workplace productivity. Perhaps most concerning for Google, ChatGPT held a 4% lead in the category of people researching products and pricing online – a segment critical to advertising revenue.
However, Google isn’t standing still. The tech giant has released Gemini, its own ChatGPT-like assistant, and rolled out AI Overviews, which use generative AI to summarize search results. 71% of Google users surveyed said these AI tools were more effective than the previous search experience, suggesting Google’s AI integration strategy is resonating with users.
The financial stakes are enormous. Microsoft Bing holds just 4% of the search market yet generates billions in annual revenue, illustrating the lucrative nature of even small market shares. Evercore analyst Mark Mahaney estimates that 1% of the search market represents roughly $2 billion annually – though that assumes monetization capabilities comparable to Google’s, which remains “highly unlikely in the near or medium term.”
Crucially, Google maintains its dominance in commercial searches – queries from people looking to purchase products like iPhones and insurance. This suggests the market share slippage is primarily in general information queries, meaning Google’s core advertising revenue stream remains relatively protected for now. Additionally, 53% of users of AI tools like ChatGPT and Gemini reported searching more overall, potentially benefiting both companies.
Key Quotes
That’s 1% share of commercial searches and assuming you can monetize as well as Google — and the latter is highly unlikely in the near or medium term
Evercore analyst Mark Mahaney explained to Business Insider why ChatGPT faces significant challenges in converting market share gains into revenue. While even 1% of the search market represents $2 billion annually, OpenAI must develop monetization capabilities comparable to Google’s highly refined advertising system – a formidable challenge.
71% of Google users said these tools were more effective than the previous search experience
This finding from the Evercore survey demonstrates that Google’s AI integration strategy – including Gemini and AI Overviews – is successfully enhancing user satisfaction. It shows Google isn’t passively watching competitors but actively leveraging its own AI capabilities to defend its market position.
Our Take
This data confirms what many in the tech industry have suspected: generative AI represents the first genuine threat to Google’s search hegemony in over a decade. The fivefold increase in ChatGPT’s search market share in just six months is remarkable, especially considering Google’s entrenched position and network effects. However, the real battle isn’t just about market share – it’s about monetization. Google has spent 25 years perfecting search advertising, building sophisticated auction systems, advertiser relationships, and targeting capabilities. OpenAI must now replicate this infrastructure while maintaining ChatGPT’s user experience advantages. The fact that Google retains dominance in commercial searches suggests its “moat” remains formidable where it matters most financially. The ultimate winner may be consumers, who now have genuine choice in how they access information online – a development that seemed impossible just two years ago.
Why This Matters
This development represents a historic challenge to Google’s two-decade search monopoly and signals how generative AI is fundamentally reshaping internet access patterns. For the first time in years, a credible alternative to Google search is gaining meaningful traction, driven by AI’s ability to provide more conversational, contextual responses rather than simple link lists.
The implications extend far beyond market share percentages. Google’s advertising business, which generates the vast majority of its revenue and profits, depends entirely on controlling how people access online information. Even small erosions in market share could translate to billions in lost revenue over time, while simultaneously validating OpenAI’s business model and attracting more users to AI-powered alternatives.
For businesses and marketers, this shift suggests the need to optimize content for AI-powered search experiences, not just traditional SEO. The fact that ChatGPT leads in product research queries indicates consumers are increasingly trusting AI for purchase decisions, potentially disrupting the entire digital advertising ecosystem that has enriched Google for decades.
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Source: https://www.businessinsider.com/chatgpt-search-market-share-google-openai-2024-12