Google’s business model is potentially one of the smartest in the world. But did they mess everything up when they introduced AI?
Google makes money through companies bidding to have their website at the top of a search result page. While it may sound quite simple, it depends on numerous factors:
1. The maximum bid is the highest amount someone is willing to pay per each click their website receives. This is cost-per-click, or CPC. Higher bids can generally place a website higher, but it depends on more than just the bid.
2. Google checks the relevance and usefulness of the websites that bid, and the landing page it links to. Higher quality landing pages are likely to get a better position, but a lower CPC.
3. Ad extensions like links, call to action buttons, and additional information can enhance the website’s performance.
Companies can optimize their websites for the auction system by setting competitive bids, refining the relevance of landing pages, implementing ad extensions and additional information, testing different formats that work best for the target audience, and adjusting the strategy based on performance data (Airvault, 2025).
With all this being said, we mentioned in class how AI is taking money away from their business. As Google Gemini generates answers at the top of the search result page, the sites below are getting less clicks, and Google is getting less money. The question remains why Google willingly messed up their business model.
The simple answer right now is Google was too scared to start on AI too late, and miss out on all the initial profit it may generate. However, with AI comes spending, and big tech companies have spent a lot more this past year. Many tech bosses are claiming that AI will pay off in the future, but investors have been nervous its sales will never amount to what has been spent. It seems that AI will not have as much of an impact on humans like the internet or mobile phones did, making future revenue look less promising (Weise, 2024).
Google was at the top of their time, creating a monopoly no one could keep up with. Did AI just mess everything up for this technology giant? Or will it pay off eventually? Only time will tell.