Google search is probably doomed as upstarts such as Perplexity dominate research particularly in younger demographics. The Google challenge revolves around proactive search and ad tools search which are related to shopping but drive Google revenue.

The following reposrt summarises the current situation and reported in Barrons.

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Google Holds I/O Event as Questions Swirl Around Search

Alphabet shares have come under pressure as investors question the company’s staying power in the new world of search.

 

Last Updated: 

May 20, 2025 at 6:27 AM EDT

Google I/O 2025: What to Watch Today

 

By

Adam Levine

 

When Google CEO Sundar Pichai takes the stage for the company’s Google I/O keynote address at 1 p.m. ET Tuesday, there will be a lot at stake.

Hanging over the company’s annual software conference is worry that Google Search is losing ground to AI search engines like Perplexity and ChatGPT. Those fears were compounded two weeks ago when Apple executive Eddy Cue said that Apple had seen a decline in Google searches on Apple browsers for the first time ever in April.

Shares of Google-parent Alphabet fell 7.5% on the news, though they have since rebounded.

Google is fighting back against potential AI disruption through its family of Gemini AI services that run across its entire portfolio, including Search. Last year’s Google I/O was used as a forum to show this platform shift, with Pichai announcing the broad rollout of AI overviews atop traditional Google searches. The overviews have received a mixed reception.

Despite a decade of heavy investment into AI, Google found itself suddenly behind when OpenAI launched ChatGPT in November 2022. The chatbot quickly won a wave of first-time AI users. But new research from Morgan Stanley shows that Gemini has caught up in the U.S., especially in e-commerce searches, a key source of advertising revenue.

In Morgan Stanley’s March survey, it found that 14% of Americans 16-or-older used Gemini on a daily basis, up from 8% a year earlier. ChatGPT attracted 13% of Americans this year.

Still, ChatGPT is winning in the most important demographic, 16-24 year-olds, where 22% of the cohort used ChatGPT daily in March, versus 16% for Gemini. Gemini does better with 25-and-older Americans.

ChatGPT edges out Gemini in informational searches, but in lucrative commercial searches like comparing prices and researching new products, Gemini comes out on top.

The Morgan Stanley data show that Google Gemini is coming on strong after a slow start. But Gemini still only has about 35 million daily average users. For comparison, Google served up over five trillion searches last year and an average of 3.4 billion people use at least one of Meta’s apps every day.

It’s still early in the AI race, and the winner may not even be on our radar yet–Google was not the first search engine, and Facebook wasn’t the first social media.

Google is likely to focus a lot of attention at I/O on AI agents, software that uses language models to automate repetitive tasks.

While widespread use isn’t imminent, these agents pose a long-term challenge to Google and all ad-based services. Perplexity recently implemented “agentic commerce,” in which users can search for products and buy them within Perplexity’s chat window, using PayPal or Venmo for payment.

Those are searches that Google has dominated to date—along with the ad revenue that they generate. They’re ads that an AI agent won’t have any interest in.