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Behind the Numbers: an EMARKETER Podcast
Google Reinvents Search as OpenAI Gets Cleared for Takeoff | Behind the Numbers
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Foreign.
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Hey gang. It's Monday, June 1st. Nate, Jacob and listeners, welcome to behind the Numbers, an E marketer podcast. I'm Marcus and joining me for today's conversation we have two AI experts who are joining the show. Principal analyst on the east coast, Nate Elliott.
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Hello there Marcus.
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Hello there to you two of America. People probably assumed analyst on the west,
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Jacob Bourne happened to be here today. Marcus.
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Hey fella.
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Today's fact, Rocky the mountain lion didn't see that coming. He's the Denver Nuggets basketball team mascot. And Harry the Hawk, who's the mascot for the Atlanta Hawks, each earn almost exactly the same amount as a professional basketball player on a standard two way player contract. That means that the player is splitting their time between an NBA team and the minor league G league affiliate. And yeah, these mascots and players on two way contracts each make about 600 grand a year.
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I have so many questions.
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Let's do it.
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Are the mascots overpaid or are the two way players underpaid?
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I think these mascots, well, these are the two mascots who make the most. So most mascots make on average about 66, 060 grand a year. And so that compared to the lowest paid NBA players, they're on standard full year contracts. That's a $1.3 million contract for an NBA player and a 60 grand contract for a mascot. These two mascots get paid an exorbitantly high amount of money compared to the average Benny the bull, Chicago Bulls 400K, the gorilla for the Suns 200 and the Hornets mascot 100. So those.
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So why do these mascots get paid 10 times more?
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Yeah, exactly. I went digging and what I can tell is just especially this, the mascot, the mountain lion is just the, the things that they can do, the acrobatics that they can perform, the performances are just much more impressive. So they can do this. They do a blind backward half court shot from the top of a 30 foot ladder, which is insane. If you Google it, YouTube it, whatever. It's insane how they're able to make that shot. They can also do trampoline dunks and they rappel from the rafters. So I think it's based on how, how impressive the performance is.
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I guess it comes down to how much the team wants to invest in their mascot.
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Probably that too.
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So you're saying if I add trampoline tricks and dunks to my portfolio, to my repertoire, then that will pay you a lot more? Emarketer will. Okay, good to know.
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That's the takeaway. Nate's go learn Trump believing to further his career. Anyway, today's real topic Google reinvents search as OpenAI gets cleared for takeoff. Ask AI or just Google It? Google makes a big change to a little search box, writes John Rowich of npr. He explains that the new intelligent search box looks similar to the old one line text box, but it's dynamic, expanding for longer queries and more chat based exchanges. It's also multimodal, meaning users can drop in videos, pictures, files into it. Did, as Mr. Rowich put it, did Google just change what it means to Google? Nate, I'll start with you. How big of a deal is Google's new intelligent search box out of 10?
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I'd give it maybe a three or a four out of 10 in importance. I mean, listen, there are two things that sound like they're opposing ideas. They're both true. One is this is how Google wins, right? Google wins in AI by convincing people that they don't need to go to a different place to get AI answers. And so the more they can take the billions and billions of people who visit Google every day, every week, every month, and get them to trust that Google will give them an in depth AI response when they're looking for it, the less likely they are to lose their enormous lead in how people discover information to companies like OpenAI and Anthropic. Having said that, they've been doing stuff like this for years. That's where AI overviews come from. That's where AI mode comes from. They've been doing so many things in so many different ways to show people that they don't need to go to a standalone AI chatbot to get AI responses, that they can get those responses from Google. This feels much more evolutionary to me than revolutionary.
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Jacob, what do you think? Because it does feel like a bit of a Trojan horse, so to speak, that they said, look, come to the same familiar place that you're used to, it's just going to be smarter.
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Yeah, I mean, I agree it is an incremental change, but I think an incremental change from Google still can be massive in importance just due to its central position on the Internet. So I'd actually give it higher. I give it a 7 in significance. Not because Google hasn't been making these changes, just because any change that Google makes is really significant. So I think from Google's perspective, I think this makes the AI mode experience more akin to the standard chatbot experience. And so I think it helps it stay competitive. I also think that it's you know these agentic capabilities that are coming, I mean, that's going to basically make the front door to the Internet kind of like an AI agent essentially. So it's going to expand access to AI agents in a way that just is not the case right now. So I think that this is going to be pretty impactful.
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Yeah, I want to come to that. Let me ask you a question first before we go to the agents piece. So Liz Reed, she oversees search at Google. She recently said what we've seen with AI overviews is that people don't want either just an AI or the web. They want a mix of both. Do we agree? Do people even know we know? I wonder how much people will notice. They'll be like, oh, I didn't realize that it couldn't, this search box couldn't expand before because I've never typed in a query that's the, that's that long.
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I think people are going to notice that. Yeah, go ahead, Nate.
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I think, you know, if you're tracking that across trillions of searches, then yes, people want both the AI response and also the open web. I think what Liz is not talking about is more interesting, which is what are the situations in which people want one versus the other? You know, when they talk about this being the biggest change of the search box in 25 years, it makes me think about all the other times they've changed the search box in the past quarter century. And by far the most common way they've done that is by adding access to non standard search results through that single search box. Right now the decision layer on Google search determines whether you get 10 blue links, whether or not you get an AI overview, whether you see video responses or shopping responses or a news response page, a maps page. There are so many different things Google can deliver in that search results page. And this is sort of adding another layer to that decision layer. And what's really interesting is the thing that they're not going to tell us because they don't want their competitors to know, which is what are the searches, what are the queries or prompts that people do want to see, AI overviews or have an entire conversation? And what are the ones that they just want 10 blue links or some other traditional form of Google search?
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Yeah. How much of this, how much does this move us closer to the zero click world that people have been kind of nervous about happening? Sarah Perez of TechCrunch was saying links will become an afterthought with the coming changes to the search results experience. How much do you think this moves it closer to that world where the user types in a search and then doesn't really have to click through to anything?
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Yeah, I mean we were already barreling towards that future, but I think that this does get us closer. I mean, there's a shortcut to Gemini baked into this upgrade. So I think that that just puts again, the chatbot experience more front and center than it was. And yeah, I think this is going to become the conversational search experience is going to become more habitual for people on a more mass scale through this upgrade than it was before.
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Yeah.
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Having said that, I, you know, people often don't recognize that almost half of searches, even before AI Overviews existed, almost half of Google searches were zero click searches. I mean, it's not like we were at 100% of searches ended with a click and then AI overview showed up and now none of them do. We were already halfway down that path and aio, based on the data I've seen, has taken us less than another halfway down the remaining half. Right. It's, you know, we're still getting clicks on more than a quarter of search pages.
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Yeah.
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So I mean it's pushed us further in that direction, but it's a direction we were already headed in. And I think the prognostications of doom that this is, you know, the death knell for the open web are pretty grandly overstated in large part because we don't know what the AI answers are going to look like because Google doesn't know what the AI answers are going to look like. Google and OpenAI and all the other companies in this space change everything about what they do. Every couple of weeks they have new models, they have new default models. When you go to their chatbots, they change the way those chatbots pump out information. Is it graphic and visual? Is it not graphic? Is it not visual? They increase the number of companies cited, they decrease the number and of course they have been increasing and decreasing the number and the visibility of the links and those are so responses on a regular basis as well. We don't know what the responses are going to look like because we're so early on in this technology that all these companies are still experimenting, still trying to figure out what their customers actually want. And to say that more AI necessarily is a death knell for the open web I think misses the point that even the companies making the AI don't know what the AI is going to look like in six months or two years.
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Yeah, it's a fair point. Take I Want to pick up on something you said, which was the agentic update here, which a New York Times piece pointing out that Google will now offer digital assistance or agents to automate searches and do tasks over time so that someone who may be apartment hunting can be notified of a new listing without opening a real estate site. They could ask agents to search for theater tickets at regular intervals. They could send shoppers a notification when something gets put on sale, et cetera, et cetera. Jacob, what are your thoughts on this update?
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I mean, it comes down to how well will this actually work? I mean, I think it's pretty compelling to have a search assistant like this. I think the value proposition is high, but, you know, it comes down to how reliable these agents are at the end of the day.
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Nate, how comfortable do you think people are going to be using these agents?
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Well, the people who have access to these agents will be incredibly comfortable using them, because right now they're only available if you pay thousands of dollars per year in Google AI subscriptions. I mean, that's, I think, a takeaway that a lot of the media have missed out on so far is this is only available to, I think, the two tiers of Ultra subscribers, which cost either $100 per month or $200 per month. So we're talking about 1,200 or $2,400 a year just to use an AI chatbot. That brings it to a very small audience that is very invested, literally very invested, as well as figuratively in using AI. Clearly, this is the right audience to try out something like this, but I think we're a long way from this being generally available, both because Google needs to decide if they're going to make this something you have to pay for. And if that's the case, then we know that 90 or 95% of Google AI users are not paying for the use of those technologies right now. And also, are people going to be comfortable using these tools? I mean, the vast majority of AI users are not the folks who are going on it 50 times a day. It's the folks who are going on it a few times a week. And so it's a pretty big jump to go from using Gemini or AI Mode as sort of a lazy but more detailed form of Googling something to building and instructing a custom agent to do tasks for you.
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Yeah, yeah, I want to.
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Sorry. Go check up. You got something?
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Well, I was going to say that I'm glad that Nate brought up the point about the cost, because agentic features are much more expensive for Google to make publicly available than just your standard generative AI features. And so I think that that's going to be just a sticking point. Agentic adoption, you know, on a whole, on the mass scale, is that if, you know, if it's too expensive for people to either, you know, pay for in terms of subscriptions or too expensive for, you know, AI platforms to make available without subscriptions, then I think it's not going to. Adoption is going to be really slow.
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Yeah, Google. Google's Gemini Spark. So it's a personal AI agent capable of navigating a user's digital life, acting on their behalf. Limited number of users making available to those who pay for, as Nate said, AI Ultra, about 100 bucks a month. Eventually, they say eventually, eventually being integrated into Chrome browser and other apps. I want to pick up on what you said there about people's comfortability using this, because I was wondering, will consumers feel happy, comfortable giving up this level of control? So Carolina Milanese, the president of consumer tech research company Creative Strategies, saying right now, what you do is you ask a question, get a bunch of answers, and feel that you're in control as to which answer that you take. If you're looking for something, which product I'm going to end up buying, that is going to be less so going forward. If you're going to say, I want a pair of Jordans, go find them. You're not necessarily sure what steps have been taken and whether the AI has used a source or a store that was paid for and therefore came up in the search results, or if any AI actually went out and did their due diligence and picked the best one for you as a customer. What do you guys think about that?
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We already see a pretty big gap in AI usage between wealthier consumers and less wealthy consumers. And I have to imagine this is a place where that gap will widen even further. I mean, the notion that you're happy to instruct an AI and let it go make a purchase decision for you implies that an incorrect purchase is not a big deal in your life. And so that means that either the stakes here are very, very small, the purchase we're talking about is a new order of kitchen roll or something else relatively small. Or it means if an AI goes and spends a couple hundred dollars incorrectly or not in the best fashion, that you're either happy to eat that cost or willing to deal with the time involved in fixing that problem. Either way, it really feels like something that wealthier consumers will be more likely to adopt. And sure enough, it's the founder CEOs at the Tech conferences I go to who are on stage talking about how they can't wait for an agentic shopping future. It's not the people I engage with in my regular life.
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I think that these things, they start with, you know, wealthier consumers and then eventually expand. But I think in terms of just where Gemini Spark is at right now, I think Sundar Pichai kind of explained the vision pretty well. He basically said agents need to be easy to use, super secure and really helpful. You know, I agree that those are the three essential elements that are the very reason why we don't have agents as, you know, pervasive on the Internet yet, I think because there are pretty much there are gaps in all three of those elements. So. So I think it's important to remember that Spark is still in beta mode.
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Do we think that maybe these tech executives aren't reading the room because Americans already don't trust AI very much? And we were talking before about do they want just search or do they want AI? Do they want a mix of both? I'm wondering if there's this disconnect between tech executive and everyday consumer. There's a bunch of stats I was reading for this about the trust in AI and how that's going in the wrong direction. In the last three years, the first point, in the last three years, negative views of AI rose from 34% to over 50, according to YouGov. Second point, from 2020, 2025, the share of Americans with a great deal or quite a lot of confidence in big tech companies fell from 32 to 24 according to percent, according to Gallup. And then from 2015 to 2019, the percentage of Americans who said tech companies have a positive effect on the country has gone from 71 to 50. 50% according to Pew.
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Yeah, I mean, I think there's a widening gap between big tech's moves on AI and public sentiment on AI. So I think that they're just kind of barreling through with the hope that people will continually get accustomed and they'll continually get more normalized in society and we'll just accept it and use it. And I think with agentic AI especially, we have to assume that it's never going to be 100% perfect. It's going to make mistakes. And so I think that those mistakes are going to lead to probably rising distrust and just frustration with AI. But I think even in a sort of a hypothetical situation where you have 100% perfect agent, I still think that people are going to be. This discomfort with AI is going to persist. And so I think that's going to continue to be a sort of a challenge, a hurdle for big tech kind of getting people to adopt.
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Yeah. Can you see current consumer sentiment actually affecting adoption?
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I do. I mean, for agents, because I think the trust level that you need to put into an agent to do things for you in the background is much higher than just chatting with a chatbot.
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Yep.
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Things besides lack of trust will affect adoption of AI chatbots and agents as well. Right. We talk about this lack of trust, but we also, we envision this future where these chatbots and especially these agents will be buying things for people. As our colleague Sarah Marzano likes to point out, people actually enjoy shopping in a lot of cases. And so there are things that you'd rather not have to shop for. And people will be happy possibly to turn over those decisions and those purchases to AI. But there are lots of things, like the Jordans you mentioned before, Marcus, where people enjoy that process. They want to go do the shopping themselves. And I think we tend to underestimate that as an inhibitor for AI adoption as well.
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Yeah, yeah. I wonder how much we're going to see this kind of bifurcation of things that people happy to buy because it's enjoyable, things that they're happy to let an AI agent buy because it's boring like paper.
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Yeah. It kind of feeds into this whole friction maxing and analog lifestyle too, which is kind of a backlash against AI, but it's rooted in this idea that it's actually good to go out and do physical things in the world. And so on top of the fact that, yeah, people just like to shop, it's also kind of baked into the. Into the backlash against AI in and of itself is that it's kind of. It spans the whole digital attitudes towards the digital sphere and that, you know, people feel like they should be doing things.
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To be clear, I didn't say I was going to leave the house to go buy those Jordans. I'm going to sit behind my three computer screens. I'm just going to do it my. Myself.
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So close.
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Well, it could be both, right? It could be, yeah. People continue to shop online and they're now more incentivized to actually leave the front door, so.
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So now you were talking about things that can affect adoption. A lot of different things can affect adoption. Speaking of adoption, Google is dethroning OpenAI as the king of consumer AI suggests. A title from the. An article from the Economist looking at which company is benefiting most from the adoption of AI on their platforms and products? Catherine Blunt and Rolf Winkler of the journal writing that OpenAI's Chat GPT is still by far the most popular AI chatbot they write and Anthropics Claude is regarded as one of the best models for coding. But investors widely view Google as a formidable competitor. Nate, what's your take on whether Google has already dethroned OpenAI as the king of consumer artificial intelligence?
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I don't think it has, but my goodness, it's getting close. We're publishing a report about our new AI user adoption forecast in the US this week and what we're looking at is by the end of 2026, Google's AI chatbots will be within about 1 million users of OpenAI's ChatGPT. Now, I didn't say Gemini, I said Google's AI chatbots. And what's really interesting, of course, is we think about Gemini as the flagship AI experience at Google. I'm not sure that's true anymore. In their earnings call last month, one of the things that Google mentioned was that they now have 1 billion monthly users on AI mode, which is the chatbot surface baked into the search results experience. They haven't announced that number yet for Gemini. They seem to actually have more monthly users on AI mode than they have on Gemini. Whatever the balance is between those two when you add them up and deduplicate the people who use both, we're looking at Google's AI chatbots being just a whisker away from overtaking ChatGPT in terms of monthly users in the US in 2026 and will decisively overtake ChatGPT in early 2027, except accelerating past ChatGPT's lead at this point.
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I thought you were going to say that it and they're all really good points. I thought you're going to say that it has absolutely overtaken it because of AI overviews now being used by 2point whatever, 5 billion monthly users. It depends what you're looking at, which AI thing. Google seems to have more places that it is able to put AI. And so yeah, it's getting close for a number of reasons and they really
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should find one name and stick with it. I don't know why it's not called Gemini Overviews in Gemini Mode, but that's a different podcast. I think the thing I'll say is absolutely, Google is overwhelmingly the place that people experience AI search results. Two and a half billion plus people seeing AI overviews every month. One billion plus people using AI mode every month and relatively close to a billion people using Gemini every month as well. It is the place that people are most likely to experience AI. Our forecast does differentiate between people who choose to prompt an AI chatbot and people who simply see AI summaries of things like search results and product reviews. And so from that perspective, we don't count people who only see AI overviews, but don't go to a chatbot like Gemini AI mode or ChatGPT and enter a text prompt. We don't count them as AI active users. But even if you are just looking at the people who prompt chatbots, Google will overtake OpenAI for monthly usage and monthly users in the first quarter of 2027.
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Yeah, yeah, yeah. I mean, I would echo that and essentially say that Google is in the process of dethroning OpenAI. And I think that Google's structural and distribution advantage was there from the very beginning. But OpenAI got its first mover advantage because as a startup it could take a lot more risks than than Google could take. And so I think that helped it both on the innovation and commercialization fronts. But I think we're in a situation now where AI has become normalized. It's seen as just a part of doing business. It's also increasingly seen as critical infrastructure. And so I think Google feels kind of more emboldened to move ahead with less caution than it did in the early days.
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It does seem as though Google said we're going to put AI everywhere and it's able to just suffocate OpenAI in that regard because Gemini is soon going to be a staple on all of basically the most popular half of the phones that people in America use in the Apple iPhones. It works out a deal to basically power Siri. It's already included in Google's Android devices. And Ms. Malinesi of Creative Strategies, who I referenced before was saying that what Google has that other AI companies lack is the cultural cache. Saying that with the Gemini model integrated into so many popular services that people rely on every day for work and play, Google has made it much more likely that folks will interact with its artificial intelligence. She goes, it's not about just how good the model is, but where it is and how easy it is for people to discover Gemini and then get use out of.
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Yeah, I mean, it is also a very good model, right? I mean, it took some time to catch up because it launched later than some of the other models out there, but it is a good model that people find very useful For a lot of consumer facing applications. Yeah, but yeah, I mean Google has the world's number one search engine, the world's number one browser, the world's number one mobile operating system, the world's number one email and web server and image folder. And I mean the list goes on and on and on. The day that it was decided that Google was going to win in consumer AI was the day that Google scientists invented the transformer. There was never a chance that they weren't going to win or at least be like in a very competitive top two in this category because they have so many advantages on distribution and as Jacob said earlier, there's structural advantages. They can build themselves into the most popular everything.
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Yeah, Nate, you said it is also a good model. I wonder what you make of this number. Then there was a recent analysis from New York Times found that Google's AI generated responses were correct 90% of the time. Google has disputed the study. Is it that people only really need 90% or is it that even if ChatGPT has a model that's 92%, 90 is good enough and really it just matters more where it is as opposed to it being a better model?
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I don't know what the number is that that study would have assigned to ChatGPT. I do know that within the last six months, OpenAI has acknowledged that 64% of ChatGPT responses that include product information include inaccuracies. Two thirds of their product responses included inaccuracies in the base model when they published that data at the tail end of last year. Now six months is a long time in AI and maybe they've gotten the 64% error rate down to 34% or 24%. But whatever that number is, it's too high. I think 10% in accuracy, Google would say is too high if they were willing to acknowledge that number. But I also, I find it really interesting that we compare all of these models against perfection. We talk about what percentage of the time do the models make mistakes. Jacob mentioned earlier that the shopping agents would make mistakes and that that would be an inhibitor for people. And I absolutely agree it will be an inhibitor for people. But by the way, I make mistakes when I'm shopping. I click on the wrong product or I accidentally put two things in my cart. I make mistakes when I'm providing information to people in emarketer reports or on this wonderful podcast. It's fascinating to me that we compare the models against perfection instead of comparing them against what we ourselves can accomplish. If we're doing the same task.
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C
Yeah, I mean I think that comes down to there's just a comfort level there where I think we are kind of more, maybe more lenient towards human imperfection than we are with AI imperfection when we can spot it. I think the other thing is we don't always 100% know when AI is being inaccurate. So I would agree that that 90% is not accurate enough. I also would say that users aren't super obsessed in my opinion with comparing these ever moving benchmark targets. And so, you know, a percentage off here and there, give or take, is, is not going to move the needle. I think it's more about access like you pointed out Marcus.
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I think the people who are going to get access to Gemini Spark Beta probably care quite a lot about those benchmar. All the folks not paying thousands of dollars per year for AI subscriptions care, as Jacob said, probably not much at all.
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B
So Cade Metz and Mike Isaac of the New York Times explaining that Elon Musk had $150 billion lawsuit against OpenAI and Sam Altman. It was quickly rejected by a federal nine member jury in the US District Court in Oakland, California. They found that Mr. Musk had failed to file his lawsuit within a timeframe required by law. Mr. Musk had accused OpenAI, its chief executive, Mr. Altman and its president Greg Brockman of stealing a charity, he said, by attaching a commercial company to OpenAI, which was founded as a non profit and taking billions of dollars in investment from Microsoft. Blake Montgomery of the British newspaper the Guardian saying the jury's decision, affirmed immediately by the judge's dismissal of all the charges, provide the AI firm with a stamp of approval for its for profit plans already in motion and a clear path ahead to go public later this year at around a trillion dollar valuation. Open Air's plans now seem to be all but guaranteed given that the world's richest man couldn't put a stop to them. Jacob, any takeaways from the Musk Altman trial?
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C
Yeah, I mean I think the, the trial itself probably in the, in the public eye played out more like a circus in a serious court proceeding. I think, you know, on the one hand a lot of people really dislike Musk and on the other hand a lot of people are really distrustful of AI and I think OpenAI is kind of a, a poster child for AI. And so I think the verdict, of course we know how it came down to the statute of implementations and I think essentially it was difficult for Musk to get around the optics of the fact that he waited until he had a competing for profit AI startup to file his suit. I think it's also safe to say that neither Altman nor Musk kind of emerged from this unscathed in terms of their image. Also, it seems to me that the image of AI probably took a hit from this as well. And I think the public probably views this as essentially a power grab among tech giants.
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B
Yeah, Nate, to what Jacob just said. David Stretfeld and Natalia Rocha of New York Times writing AI critics dismissed the three week trial in federal court in Oakland as a power struggle between oligarchs that was of little concern to the masses.
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Close quote.
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What do you take away from the trial, if anything?
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Yeah, I mean, I agree with that assessment, but I also think we're far from having heard the last of this. Musk doesn't tend to let things slide. I imagine he'll be back with further action. I mean, the thing that seems true is that all the founders of the various AI companies think that AI in the wrong hands is incredibly dangerous, possibly at an existential level for humanity. And they all think that they're the only ones who can be trusted and that all the other AI founders are the existential threat. But perhaps the wildest takeaway for me out of all that is we didn't get to find out what a jury would have decided. Did they steal a nonprofit? Because you can make a pretty clear argument that they did, just as OpenAI can make a pretty clear argument that they didn't. And the notion that if they did do that, and again, there was no finding of fact, as far as I can tell, in either direction. But the notion that they may have done that and we don't get to find out if they have done that simply because a clock expired is just wild to me.
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B
Yeah, yeah, it was interesting as well, because OpenAI's lawyers were arguing and showing that Mr. Musk was, when he was still at the company OpenAI, because he helped found it, he had repeatedly tried to transform the lab into a for profit company, including an effort to fold OpenAI into his electric car company, Tesla. And they were arguing the only reason he sued is because OpenAI had become very successful after he'd left. But yeah, they basically said that you weren't able to, you didn't sue in time. And so that's why it got thrown out. And then with this Professor Sarah Kreps, Director of Tech Policy Institute at Cornell University, saying the trial served as a reminder of how much the future of AI still depends on a remarkably small group of powerful tech figures and their personal rivalries, highlighting a broader disconnect between the people building these systems and the many people increasingly expected to live and work alongside them. That's what we've got.
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Best quote of the whole episode. I know, Sarah, because it came from Cornell.
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C
Okay.
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B
Affiliation with Cornell, perhaps?
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A
Yeah. Small one.
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B
There we go. That's where we got time from in this episode. Thank you so much.
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To Nate, thank you very much.
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And to you, Jacob, thanks for having me. Yes, indeed. And to the production crew. We've got Lance helping out with this one. To everyone for listening to Barn and Numbers New Marketer podcast. Subscribe and follow to hear about new content. Suzy will be here Wednesday talking about the Walmart of the UK Tesco. And I'll be back Friday discussing how brands are investing in real world experiences.