Younger People Aren’t Googling As Much. That’s Bad for Google.

Summary

WSJ Tech News Briefing Summary Episode: Younger People Aren’t Googling As Much. That’s Bad for Google. Release Date: December 11, 2024

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1. Tech Talent Migration: Big Banks as the New Tech Hotspots

Host Bel Lin opens the episode by highlighting a significant shift in the tech hiring landscape. Contrary to the booming tech sector in previous years, big banks are emerging as the new desirable employers for tech professionals.

Key Points:

• Aggressive Hiring by Banks: Despite a more measured tech hiring environment, major banks are actively recruiting top-tier tech talent.
• Emphasis on AI and Research: Banks are heavily investing in artificial intelligence and expanding their research departments, offering roles traditionally associated with tech giants like Google.

Notable Quotes:

• Isabel Bousquet (WSJ Reporter) at [00:34]:
  “They’re snapping up top researchers. They’re building out these big, even pure research departments where, if you’re an engineer, you can go and work there and develop research, file patents, present at conferences.”

• Isabel Bousquet at [02:55]:
  “The financial sector is pretty stable. Salaries are good... in tech, you’re not getting those crazy sort of equity packages and benefits that we were seeing maybe a few years ago.”

Additional Insights:

• Comparison with Tech Companies: Working at banks now offers similar opportunities for innovation and research as traditionally tech-centric companies.
• Appeal of Real-World Data: Banks provide access to extensive financial and customer data, allowing tech professionals to tackle practical and impactful problems.

Bel Lin also mentions other sectors like big retailers (e.g., Walmart), healthcare, and insurance that are ramping up their technological capabilities to attract tech talent by leveraging large datasets and addressing real-world challenges.

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2. Google’s Struggles: Shifting Search Behaviors and AI Competition

The second segment delves into the challenges facing Google’s core search and advertising business, primarily driven by changing user behaviors and the rise of AI-powered alternatives.

Key Points:

• Declining Search Traffic: Younger demographics are increasingly bypassing Google in favor of AI chatbots and platforms like TikTok and Amazon for information gathering.
• Impact on Ad Revenue: Google's primary revenue stream from search ads is threatened as users engage less with traditional search methods.
• AI-Generated Content: The proliferation of AI-generated content is diluting the quality and reliability of search results, further diminishing Google's utility.

Notable Quotes:

• Christopher Mims (WSJ Tech Columnist) at [06:05]:
  “Young people primarily are turning to AI chatbots instead of Google. They’re also searching on TikTok... something like 1 in 3, 1 in 4 folks, when they open TikTok, start searching on it within 30 seconds.”

• Christopher Mims at [07:04]:
  “Google's bigger challenge here is the way this threatens the whole ecosystem of the Internet... there’s not ad revenue flowing to the people who are creating the things that were being indexed by Google.”

• Christopher Mims at [07:53]:
  “Their so-called search generative experience... keeps getting more sophisticated. I had the unnerving experience... it reasoned through the answer with citations and that really blew me away.”

Additional Insights:

• Transition to AI: Google is enhancing its search with AI capabilities to compete with standalone AI chatbots, aiming to maintain its dominance by integrating reasoning and sourcing into search results.
• Advertising Challenges: Integrating ads seamlessly into AI-driven search results remains unresolved, posing a significant threat to Google's advertising model.
• Ubiquity of AI Assistants: With AI becoming integrated into various platforms and devices (e.g., Apple’s AI, Chrome’s facilitations), users are increasingly conditioned to rely on AI first for information retrieval.

Christopher Mims emphasizes that Google's struggle is not just about losing search traffic but also about maintaining the integrity and profitability of the entire web ecosystem. The shift towards AI and platform-based searches could lead to a long-term decline in Google's traditional search dominance and advertising revenues.

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Conclusion

The episode underscores a pivotal moment in the tech industry where traditional tech giants like Google face significant threats from emerging trends and shifting user preferences. Simultaneously, major financial institutions and other non-traditional tech sectors are repositioning themselves as attractive destinations for tech talent by offering stability, substantial data resources, and opportunities for impactful innovation. These dynamics collectively signal a transformative period for both tech employment and the landscape of internet search and advertising.

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Produced by Julie Chang, Supervising Producer Catherine Millsope

Transcript

[Merrill Lynch]

Say this is your financial life. Over time, things can get more complex. With a personalized plan, Merrill can help you navigate it all. Learn [e-mail] Bullish Merrill, a bank of America company. What would you like the power to do?

Investing involves risk Merrill Lynch, Pierce Fenner and Smith Incorporated Registered Broker Dealer Registered investment Advisor Member SIPC A wholly owned subsidiary of bank of America Corp.

[Bel Lin]

Welcome to Tech News briefing. It's Wednesday, December 11th. I'm Bel Lin for the Wall Street Journal. The hottest job in tech might be at a big bank. Changes to the tech hiring market mean that working at big banks might be more desirable than ever. We'll find out what banks are doing to reel in top talent from the tech sector. And then Google's core business is under siege, and that could lead to a long decline in search traffic and the outsized profits generated from it. Our tech columnist Christopher Mims tells us what young people and artificial intelligence have to do with the search giant's challenges. But first, tech talent is flocking to work for banks. Though hiring in the tech sector has become a lot more measured than it was a few years ago, big banks are among the employers still aggressively hiring. For more on how banks are attracting talent and why some techies say they prefer to work at a bank, we're joined by WSJ reporter Isabel Bousquet. So, Isabel, in your story, you say that working in a bank's technology department might finally be as cool as landing a job at Google. Why is that?

[Isabel Bousquet]

Yeah, there's a few different reasons. The first is that banks have been making a really big push to sort of evangelize the value of technology within their organizations. They're doing a lot more with tech and with AI, AI specifically, than they ever have before. So they're basically snapping up top researchers. They're building out these big, even pure research departments where, you know, if you're an engineer, you can go and you can work there and you can develop research, you can file patents, you can present at conferences. All the kinds of things that you would normally have to have been at a tech company to do, you can now do at a bank. And so that's all happening in the background. And at the same time, you have this dynamic where the tech job market is maybe not as crazy as it was a couple years ago. There's not as much hiring. And when talent is looking for where to go, they see the financial sector as one that's pretty stable. Salaries are good, although they're comparable with tech. But in tech, you're not Getting those crazy sort of equity packages and benefits that we were seeing maybe a few years ago.

[Bel Lin]

Okay, what else is it about jobs at big tech companies that have made them less appealing than they were in their heyday, say, a few years ago?

[Isabel Bousquet]

Just the fact that these companies aren't necessarily growing as much as they were. They're definitely still taking the biggest percentage of grads, but their minds are just like a little more open to going to other industries, especially as AI becomes something that is really prevalent in every industry and not just the tech industry. You know, if you're interested in data science and engineering and sort of solving real problems, one of the benefits of working at a bank is they have access to a ton of financial data and it's real customer data. And if you're working at a tech company, you're solving problems that are just a little more theoretical. Someone I talked to compared it to tech companies are almost on the supply chain of delivering technology, and these banks and other enterprises are more in the demand chain.

[Bel Lin]

Are there any other sectors like finance that are upping their cachet with tech job seekers or trying to woo more of them away?

[Isabel Bousquet]

Some of the big retailers in the US Are making a big push into technology. If you think about like what Walmart's doing, Healthcare is trying to make a big push into technology as well and trying to hire a lot there and then insurance that maybe sort of overlaps with finance a little bit. But they have a similar draw where they have a lot of data and a lot of real world problems that they can easily solve with technology.

[Bel Lin]

That was our reporter Isabel Bousquet. Coming up, people are increasingly getting answers from AI and younger people are using platforms other than Google to gather their information. What that means for the search giant. After the break.

[Merrill Lynch]

Say this is your financial life. Over time, things can get more complex. With a personalized plan, Merrill can help you navigate it all. Learn [e-mail] Bullish Merrill, a bank of America company. What would you like the power to do?

Investing involves risk. Merrill Lynch Pierce Veneran Smith Inc. Registered broker dealer registered investment advisor member sipc, a wholly owned subsidiary of bank of America Corp.

[Bel Lin]

Out of all the trends moving against Google, the Justice Department's recent attempt to break up the company could be the least of its problems. Among these varied risks, the most culturally charged is the danger that Googling for information seems out of date. But there are plenty of other challenges to its business. And taken altogether, they could damage Google's primary profit engine, which feeds its bets on things like Waymo its self driving car unit. For more on how Google is responding to these threats and why Googling just doesn't seem cool anymore, we're joined by WSJ tech columnist Christopher Mims. Christopher, you write that Google's core business is under siege. Tell us why is that?

[Christopher Mims]

Young people primarily are turning to AI chatbots instead of Google. They're also searching on TikTok. So some internal documents that some other journal reporters dug up found that something like 1 in 3, 1 in 4 folks, when they open TikTok, start searching on it within 30 seconds. And it's the kind of topics you might previously have searched for on Google. And people of every age are starting their shopping journey on Amazon, so they'll just go straight there to search for things that they want to buy. And it's largely, but not entirely a generational phenomenon, this move away from Google, which still dominates traditional search. It's 90% of traditional search. But what that figure neglects is the fact that tons of search is happening outside of traditional search.

[Bel Lin]

What's the bigger issue here for Google?

[Christopher Mims]

Google's bigger challenge here is the way this threatens the whole ecosystem of the Internet. Because if people are using chatbots, let's say for search, and more and more of Google's search index is polluted with AI generated content, then it's a two sided problem. There's not ad revenue flowing to the people who are creating the things that were being indexed by Google. And at the same time the utility of Google search results is going down.

[Bel Lin]

But what's the appeal of getting answers from an AI search answer engine as opposed to Google or classic search engine?

[Christopher Mims]

For those of us who grew up with Google, it can seem like why do you need the answer directly, especially when it might be wrong, but especially younger people. I mean, I have this conversation with my kids all the time. They're like, I just want the answer. And of course Google knows this. So their so called search generative experience, it started as a pilot, it had a bumpy rollout, but if you notice now it's on top of, I would say a majority of searches and it keeps getting more sophisticated. I had the unnerving experience this morning of asking Google a question like basically a math problem. And it didn't just give me a generative answer that summarized what was on the Internet, it reasoned through the answer with citations and that really blew me away. But that shows how seriously Google is taking the threat of not just answer engines, but answer engines that can reason and think.

[Bel Lin]

How Widespread are these AI enabled search engines.

[Christopher Mims]

ChatGPT has seen explosive growth. Meta is cramming chatbots into everything. There are copilots now everywhere. You have Apple intelligence now, and eventually that will be on every iPhone. You can't use Google Chrome or Chrome OS or a Chromebook and not have it trying to pop up helpful answers all the time. So this is just becoming ubiquitous. We are all being conditioned to ask questions of the AI first.

[Bel Lin]

Okay, let's talk about Google's business for a moment. Why is it important for Google's core search and ad business to really thrive?

[Christopher Mims]

The overwhelming majority of Google's revenue is still ads on its own search engine. And there's a much smaller portion, something like 20% or less, which is ads across the Internet. And so Google is really counting on us seeing those sponsored links and clicking on them. Part of Google's challenge is that in order to be the best answer engine, it really has to physically demote ads and links. And we don't yet have a model for how chatbots can seamlessly incorporate ads into the results that they give us. Perplexity and others are trying. OpenAI is trying, but it's almost like the transition from traditional or cable TV to TikTok and YouTube. We are going from a medium where it was very natural to insert an ad that you, in a sense, couldn't skip or couldn't avoid, to a medium where we just haven't figured out how to create an unavoidable ad, which doesn't ruin the experience.

[Bel Lin]

How else is AI a risk to Google search?

[Christopher Mims]

The explosion of AI generated content is a huge threat to Google search. Google, when I have asked them about it in the past, has said we don't care if something is generated by AI as long as the user is having the best experience, it's getting the results that they want. In some ways, that's an admission of the fact that it's increasingly difficult to tell whether something is created by AI automatically. Automatic AI detectors just aren't that great. And so we're entering a world in which everything that's on the open Internet is going to be touched by AI in one way or another.

[Bel Lin]

That was our tech columnist Christopher Mims. And that's it for Tech News Briefing. Today's show was produced by Julie Chang, with supervising producer Catherine Millsope logging off. I'm Belle Lynn for the Wall Street Journal. We'll sign back in this afternoon with TNB Tech Minute. Thanks for listening.

[Merrill Lynch]

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Investing involves risk Merrill Lynch, Pierce, Veneran Smith Inc. Registered broker Dealer Registered investment advisor Member SIPC A wholly owned subsidiary of bank of America Corp.