The great power competition in the AI era will likely be between OpenAI and Google, and one of the main battles could be over advertising dollars. That's how OpenAI CEO Sam Altman described the world during an appearance on the Big Tech Podcast on Monday.
Although OpenAI is not yet profitable, it is reportedly preparing to sell advertising within ChatGPT in order to monetize the many free users on its platform. ChatGPT currently has 800 million weekly active users, but only 35 million of them purchase a subscription. The ads could help pay for OpenAI's plan to spend $115 billion on infrastructure by 2029 and could run as early as early 2026.
As Altman pointed out on the podcast, Google has been slow to put generative AI at the center of its products, especially its cash cow: search. “Google probably has the greatest business model in the entire industry, and they would be slow to abandon it,” Altman said. Google has become a $2 trillion company that sells advertising around traditional “10 blue links” search results. Answering search queries with AI-generated results means lost revenue, especially for product searches. (Google has since developed its own AI search experience and is experimenting with matching ads.)
Altman believes Google's reluctance to embrace generative AI in its products has bought him time and staying power at the company. “If Google had decided to take us seriously in 2023, we would have been in a very bad situation,” the CEO said. “I think they could have crushed us.”
OpenAI (along with Perplexity) believes that Google will struggle to monetize AI search ads after spending decades perfecting a massive apparatus for selling ads around traditional search results. “[B]Incorporating AI into web search — I may be wrong, I may be drinking the Kool-Aid here — I don’t think it will work well enough to rethink the whole thing. [business]'' Altman said. He seems to suggest that his company is well-positioned to reinvent web search and advertising because it is a pure AI role.
While it's true that Google has been slow to evolve search (and search ads) toward AI, the company still has a significant advantage when competing for brand advertisers' dollars. We have a database full of custom information that you can use for specific searches, such as local business searches, weather forecasts, maps, and more. And we have more ad targeting data than anyone else.
“Like Yahoo, Microsoft, Blackberry, and countless others, there is very good reason to fear that OpenAI will eventually succumb to the behemoth of Google,” Stratechery analyst Ben Thompson wrote in a recent newsletter. “I still want to believe that OpenAI can be an aggregator, but they don't have a comparable business model. That could be fatal.”
