Google: Keep The Golden Goose
Summary:
- Google executives appear to be doing what I feared most: interfering with the goose that lays the golden eggs (making changes to the core Google.com product).
- Recent news outlines a newly-detailed set of Google Search changes being developed by Alphabet.
- However, there are natural hedges in place at Google that should prevent changes that may not be advisable.
- Considering the full picture, I continue to believe that the company will be just fine – but am also more cautious than before.
Overview
Google (NASDAQ:GOOG, NASDAQ:GOOGL) executives are doing what I feared most: messing with the goose that lays the golden eggs.
A recent article in the Wall Street Journal adds specifics to what were previously just speculations:
Since Google Search is almost all of Alphabet’s bottom line – 99.1% as of Q1 2023 – these changes could be significant. While I remain in the ‘if it ain’t broke, don’t fix it’ camp, I am also not too surprised to see them moving in this direction.
The devil will be in the details here; or not. This article will explore the shifting context around Google Search as well as how things may very well play out.
Google Search
To contextualize these changes it is worth remembering that Google’s search engine market share has not been affected by the AI announcements from Bing. Looking at the data, we can quickly see that there has been no material change to user habits between the two search engines. Statistically speaking, there is no variation here apart from statistical noise (expected variance).
Month-Year |
Oct-22 |
Nov-22 |
Dec-22 |
Jan-23 |
Feb-23 |
Mar-23 |
Apr-23 |
Google Market Share |
92.34% |
92.21% |
92.58% |
92.90% |
93.37% |
93.17% |
92.63% |
Bing Market Share |
3.59% |
3.42% |
3.03% |
3.03% |
2.81% |
2.88% |
2.79% |
Source: Excel, StatCounter.com
We can rest assured that Google.com is still doing just fine.
Changes to Google Search
With that context out of the way we can evaluate what changes Google is making.
The Journal reports that Google wants to:
incorporate conversations with artificial intelligence, along with more short video and social-media posts ..
This sounds like a significant shift away from what Google has been calling the ’10 blue links’ approach that it has had up until now. This also sounds more significant than what I expected when I first heard about ‘project Magi’, Google’s internal codename for this initiative. Personally, short video and social-media posts are quite distinct from what I regularly use Google for.
The Journal further notes that Google:
Plans to make its search engine more ‘visual, snackable, personal, and human’, with a focus on serving young people globally ..
With this sentence I am increasingly concerned about Google Search. This sounds like a major slate of changes that immediately remind me of TikTok. Google Search is not TikTok – and it has no business resembling it. While I appreciate the value and popularity of that kind of content, integrating this would be too radical a change from Google Search today. I sincerely hope that my Google Searches don’t start yielding short-form videos, as this would fundamentally change the Google Search experience and seemingly make it much more distracting.
While it is good that Google is focused on ‘serving young people globally’, I am sure that it does so already. It would be risky for Google to reorient its product around one particular demographic and potentially alienate the rest, and it wouldn’t be the first (or last) company to do so.
The Journal asserts that this will all be done in order for Google to better respond to ‘queries that can’t be answered by traditional web results’. It spells this out in detail:
Google search visitors might be more frequently prompted to ask follow-up questions or swipe through visuals such as TikTok videos in response to their queries.
This would be a completely different experience than Google Search as it has existed.
If Google can integrate this feature set in a way that doesn’t change the core product, I think they will be in the clear; otherwise, I would have concerns. In the next section I’ll describe how this process could play out as well as some technical considerations that are relevant to Google product changes.
Implementation
I am sure that I’m not the only person that thinks Google is risking a lot by considering changes to its core product. The good scenario here would be some form of auxiliary implementation in which users can use the new features but can access good ole’ Google Search.
Additionally, we must keep in mind that Google is an internet-scale data company. Every user that uses a Google product is interacting with what is a dynamic, changing, piece of software. For B2C technology products such as Google Search, feature changes usually get rolled out in the form of ‘A/B tests’. This creates a live experiment in which one group of users makes use of the application without new features and another group makes use of the application with new features. Based on the data from this experiment, a technology company like Google will choose to distribute a feature across all users or keep it on the backburner.
This serves as a natural hedge against product changes that are too significant, and Google will certainly roll out changes in this way while responding accordingly. This will ensure that users have the final say on where the search engine goes.
Conclusion
It remains to be seen what happens with Google Search. While at this point it does look like they are going to roll out significant changes, I hope that they find a way to offer what is more of an add-on product rather than changing the core experience. If Google Search becomes materially different for regular users like myself, I am going to get materially concerned about user retention and ultimately Google’s bottom line.
Yet, I’m not overly worried about the golden goose here because I believe that these changes will be rolled out cautiously. My take is that Google is well aware of the value of its core, simple, product – and will play it safe. This belief stems from two factors: the presence of the founders that are still on the Google board, and the aforementioned technical user testing involved in bringing feature changes to market. Together these should act as a hedge from any true disruption to the core Google product. While admittedly more cautious than before, I retain my buy rating on Google stock.
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