San Francisco-based OpenAI has been the subject of much discussion recently since Microsoft (MSFT) announced it would be using ChatGPT to transform how Bing responds to user search queries.
Given the amount of media attention Microsoft received on the news, Alphabet (GOOGL) said on Feb. 6 that it was opening up its new AI technology, called Bard, to public testing. In a demonstration, however, an error appeared with the technology. Investors became concerned and a selloff of Alphabet shares ensued.
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At investment management firm Ark Invest, CEO Cathie Wood's chief futurist Brett Winton has some thoughts on the future of search that might add to Alphabet investors' fears.
"... Google is fundamentally impaired by this transition to AI," Winton said on CNBC, quoted in a tweet by @CNBCFastMoney.
"Ark Invest's @wintonARK lays out why $MSFT has the advantage over $GOOGL in AI, and why Alphabet's business model might be in serious danger," continued CNBC, which then added video of the remarks.
"It's a classic innovator's dilemma story, where they claim they have technology," Winton said in the video. "They could do it if they wanted to. But the transition to AI really imperils both the cost structure of search and their ability to generate revenue off search. Their entire business model is built around taking people and delivering them to the next site."
Winton then explained his view on how AI will impact the search experience.
"These AI systems actually deliver answers to the end users," he said. "So search as a weigh station to the rest of the internet, it's not going to persist as typical user behavior over the course of this business cycle."
Winton said his assessment is independent of the botched launch.
"People inside Google will say, 'Hey, we have just as good AI as OpenAI,' which is probably true," Winton said. "But their entire business structure revolves around this idea that people go to a site to go to another site to get to their answer."
Winton explained his view that search will begin to be used inside existing software, such as Excel. Then he spelled out the upcoming four stages of grief he believes will be experienced at Alphabet.
We think that text prompt AI-based tools are going to live inside of software. You're no longer going to go outside of Excel to Google Search to look for a piece of data. That piece of data is going to be provided to you inside Excel.
So it will cut Google Search out of that entire user flow and extend that to any economic activity that an employee engages in.
And so the stages of grief for Google shareholders is one, first stage, "Hey, this isn't going to matter. Second stage is "Hey, actually this will make search more costly to perform."
Then the third stage is "Hey, actually this is going to impact the number of clickthroughs we get from search because it's providing answers."
But the fourth stage is, "Hey, people aren't going to go to search at all. Traffic's going to fall off because the way in which we engage with the material of information on the internet is going to be changed by this."
