ChatGPT is not just about Search
This week was seminal in the AI world as ChatGPT integrated into Bing search results with some heralding it as Microsoft's "iPhone moment".
Satya Nadella, Mikhail Parakhin and my former colleagues at team Bing clearly did a kick ass job, and if you look at how ChatGPT powered results are presented it clearly highlights the multi-billion problem that my ex-colleagues at Google have.
When asked a question that can be handled by ChatGPT, Bing seems to be pushing SERP down below the fold and surfacing the ChatGPT as a hero answer on the top that takes up all the space above the fold. Essentially Ads revenue drops to zero for these search queries.
Microsoft bought in 198B$ in 2022 (fun fact- there are 161 countries on the planet whose GDP is less than that) of which search is estimated at just ~12B$. I am sure Bing search results on the web- which is where these results show up is a fraction of that 12B$ number.
Google's ad revenue from search in 2022 on the other hand is ~170B$ of 283B$ total. The market is rewarding them this week for sitting on their laurels for too long and then releasing a product so quickly that Prabhakar and team did not even have the time to vet the correctness of a recorded demo.
The interesting thing is that this is not even the killer application of ChatGPT that MSFT can do- imagine ChatGPT natively in Office 365, MS Azure, GitHub. Actually I did one better. I asked ChatGPT how it would improve these products using output from ChatGPT.
Now some of these ideas (esp. on Azure) are naive, however the features suggested on Office 365 and GitHub are very much on the money- and may I say more innovative than many I routinely hear in product interviews.
I am going to make three educated guesses based on the evidence that I see:
- Google cannot implement Bard at scale on its SERP without taking a major hit to their cash cow that brings in ~60% of their top line revenue and a significant part of their margins
- Microsoft may take some hit on advertising revenue, but for the most part will make it up in increased search volume and adoption of Bing and will hit revenue home runs with integrations into Office 365, MS Azure, Github and other products. At the end of the day this is NOT about just search for Microsoft
- We will see some really cool product announcements from Microsoft this year!
What does this mean for the rest of us?
As I said in my last post on ChatGPT, this moment is akin to the discovery of wheel by humans. You can either bury your head in the sand and hope that AI is the next Crypto/NFT/Web3 or you can invest deeply in understanding how your company will be using AI in its products to serve your Customers better. Another pro-tip- if you think hiring good Software Engineers is hard, hiring good Machine Learning Engineers is insanely hard.
For individuals planning their career, my advice is to embrace AI technology and tools and learn how to co-create with AI.
The future is bright for people that embrace change.