Can the Rise of personal assistants and Artificial Intelligence kill the world’s biggest search engine?
When my mother, who didn’t own a mobile phone, or a computer and had never been on the internet asked me if she should invest in Google at the time of their IPO I told her that I thought she should invest in companies she understood and was interested in. Kind of a dodge, but I’ve found it helps not to be too definitive with my mother.
The truth was that I was unsure myself. On the one hand you had the massive build up in publicity, the utility of the service, and the fact that they became an eponym almost overnight. On the other, you had their insecure business model. In a classic case of over-thinking I reasoned that their long-term performance was too indeterminate to invest in because I couldn’t see how they would develop sustainable advantage — would brand be enough?
See, the thing about Google is that they are incredibly vulnerable. Despite all the hooha around them, if the day after their IPO someone else came along with a better search engine they’d be toast. We would all just log onto that. In business-ese this is to say that their vaunted simplicity model – no learning required, just pull up the site and search – is also their weakness. They have no switching costs, no learning economies, no network economies, etc. What they do have (now) is a wickedly powerful brand and the money and intellectual resources to buy or out-market any superior solution that comes along.
Well, sort of.
The folks at Google are working feverishly to develop new service lines and revenue sources. At least in part, I suspect this is because they are aware that they are vulnerable. See, despite the successes of Android, Chrome, Maps, etc. these folks primarily make their money through on-line advertising. And they make that money either because people are seeing the ads, or because they are clicking on them. And this is their Achilles’ heel.
When I first heard about Siri I thought it sounded cute. A little voice to help you set your alarm, or get directions. But as I thought about it a bit, and its implications I had another thought — “I wonder if I should short Google now?’
This is because Siri represents an interesting new move in the tech world – Hollywood Star treatment for all: aka re–intermediation.
Disintermediation has been seen as the engine to drive industry change since the first dot come era. You have old, costly, bureaucracy that comes between you (the consumer) and a product or service. And that bureaucracy charges a toll. Get rid of it, and things are faster and cheaper. Yay.
And, like the do-it-yourself checkout lines in supermarkets, they come at a cost. Your effort.
But, people don’t like to do things they don’t have to – not unless the advantages (like time-savings) greatly outweigh the effort.
So, disintermediation happens, fortunes are made, value chains are optimized, time is saved (sort of) and the world is a better place.
Excepting the fact that it is only this way because there isn’t a better way.
Until there is.
So, let’s imagine a new technology. This technology bucks the trend of disintermediation. Instead, this technology intervenes in everything — re-intermediation. This technology get’s you your answers as fast as you could yourself, but without you having to make the effort. This technology frees you up to do other things (like loaf) instead of clicking, and typing and what have you. This technology does everything you ask it to do, and filters out all the advertising and other stuff you don’t want to see. You just get what you want.
Sounds good – sign me up.
To me, this technology – a personal assistant app on steroids, personal AI, whatever, is a killer. Specifically, it could kill the entire advertising base of existing content providers because people will not have to look, and click to get what they want (and it is the looking and clicking that drive the dollars). It will be served up to them whole – no extras.
It sounds like a far fetched idea – or so I thought – until I started thinking about Siri and her kin and what they represent in version 2, 3, 4 – etc. At some point – probably quite soon – it will really work. So much so that it will take away your need to point and click and type. And when that happens the on-line world will change. No more looking and clicking and typing means no more ad dollars.
Of course, we are still creatures who prefer to get their information visually. Which means for the foreseeable future we’ll want to look at things – like cat videos. However, we could still look at things, but without the advertising. Our personal AI just finds the appropriate cat on Youtube and plays it for us.
Now, without the advertising to support it who is going to pay for the terrabytes of daily uploads stored on Youtube? Will there even be a Youtube? Fun stuff to think about.
So, I still haven’t shorted Google. I still think we are probably a couple of years away – maybe more. The people at Google are bright, and they have been investing in AI companies. I’m sure they have seen this line of reasoning, or something similar, and are preparing for battle. In any case, my advise to my mother was stupid – she’d have made a bundle.