Despite being viewed by Wall Street as a formidable force, the advent of the artificial intelligence era has complicated the growth outlook for this company and exposed numerous underlying concerns.

On one front, Google is facing intense competition from various AI models and services, while on another, it is experiencing a loss of some users who seek a pure search service without AI functionality.

Over the past week, two of Google's leading AI researchers departed for emerging rival firms.

On May 20, 2025, in Mountain View, California, Alphabet (ASX: GOOGL) CEO Sundar Pichai delivered a speech at the company's annual developer conference, I/O.

More than three years into the generative AI boom, many skeptics once declared that ChatGPT would sound the death knell for this search giant. Google has withstood that external pessimism, but cracks are now beginning to appear in its core business.

Privacy-focused search engine DuckDuckGo has seen weekly installs surge by up to 40%. Last quarter, Microsoft's Bing surpassed one billion monthly active users for the first time. Over the past month, Google's search engine traffic has declined slightly, while ChatGPT's traffic has seen a modest increase.

Google still commands about 90% of the global search engine market share. Its stock price has more than doubled over the past year, and its first-quarter revenue grew at its fastest pace since 2022. However, the market pressure from AI remains severe as more users turn to chatbots as their primary tool for information retrieval. ChatGPT consistently holds the top spot on Apple's iOS free app chart, with Anthropic's Claude ranking eighth, just one place behind Google's Gemini.

Simultaneously, another segment of internet users is moving away from AI-driven search tools entirely, opting for alternatives without AI features. A Pew Research Center survey from March indicated that roughly half of U.S. adults feel more concerned than excited about AI in daily life. Avoiding AI online has become a choice for many. Earlier this month, DuckDuckGo launched a new browser extension featuring a no-AI search engine, allowing users to default to noai.duckduckgo.com for pure web searches.

Lily Ray, Vice President of Search Engine Optimization and AI Search at marketing agency Amsive, stated, "Many people use Google because it's the homepage of the internet, but users want to browse the web, click through results manually, and make their own judgments about information."

Google also faces a talent war with well-funded AI startups that are aggressively hiring top technical talent in preparation for potential IPOs.

Last week, Google engineering vice president and Gemini AI co-lead Noam Shazeer announced his departure to join OpenAI. This past Friday, DeepMind vice president and engineering fellow John Jumper left for Anthropic.

News of this talent exodus contributed to a 5% drop in Alphabet (ASX: GOOGL) shares on Monday, marking its worst single-day performance in over a year.

Analysts at Jefferies noted in a report, "We do not view the recent departure of key talent as indicative of a pullback in Google's AI investment. It is simply another reflection of the broader industry talent war, where frontier AI labs are aggressively recruiting with lucrative offers."

A Google spokesperson declined to comment on the matter.

Since the launch of ChatGPT in late 2022, the rise of generative AI has represented a near-existential crisis for Google. With ChatGPT now boasting over one billion monthly active users, the threat is twofold: the potential erosion of Google's search monopoly, and the risk that competing in the AI race could cannibalize its traditional search business before a viable digital advertising model for the new intelligent information retrieval paradigm is established.

Advertising still contributes about three-quarters of Google's revenue. The exceptionally high margins from this business fund Google's long-term, costly projects like Waymo autonomous driving and space-based AI, and enable investments of nearly $2 trillion in AI infrastructure.

At last month's I/O developer conference, Google announced its first major redesign of the search box in 25 years, embedding an "AI mode" button directly into it and moving the traditional search button below the box.

Elizabeth Reid, head of Google Search, stated at the event, "This is the biggest update to the classic search box in its 25-year history." Additionally, Google's popular image generation tool, Nano Banana, was integrated into the search box, accessible via a plus button. In Google's mobile search app, the large "AI mode" button is nearly the same size as the regular search box.

Signs of an AI Backlash

Over the past month, overall traffic to Google's search engine has declined by over 1%, while ChatGPT's traffic has risen slightly. DuckDuckGo, a long-time privacy-focused competitor to Google, reported that its app installs surged by up to 75% following Google's I/O announcements in May.

Amsive's Lily Ray observed, "Google has to strike a balance. If it goes too far with AI, it will lose a significant number of users." She acknowledged that DuckDuckGo's market share remains minuscule but noted its recent rapid growth.

Even Alphabet (ASX: GOOGL) CEO Sundar Pichai has acknowledged public anxiety about AI. In a recent episode of the "Hard Fork" podcast, Pichai stated that it is reasonable for people to feel uneasy about an AI-shaped future, as the scale of this technological shift is unprecedented.

Both Google and OpenAI have faced lawsuits related to alleged wrongful deaths, with families accusing the platforms' chatbots of inducing violent or self-harm behavior. In March, the father of a 36-year-old man sued Google, claiming the Gemini chatbot encouraged his son to plan a mass shooting, which ultimately led to his suicide.

In the search arena, DuckDuckGo is not alone in catering to demand for AI-free search. Microsoft introduced a Bing browser extension called "Bing AI Search Choice," allowing users to toggle off its conversational AI features with one click.

Jordi Ribas, Corporate Vice President of Search and AI at Microsoft, wrote in a LinkedIn post about the update, "AI adds a lot to search, but research shows not everyone wants to use AI all the time, for everything."

Resistance is also growing among major content publishers. A significant drop in Google search traffic is partly attributed to AI generating summaries at the top of results, reducing the need for users to click through to original web pages. Last year, in court filings for its antitrust case with the U.S. Department of Justice, Google acknowledged that the open web ecosystem is in rapid decline, a statement that contrasted with previous public remarks by its executives.

Google Loses Search Antitrust Case

Research from third-party data platforms like SparkToro and Similarweb indicates that about 68% of Google searches now result in users not clicking any external links. Roger Lynch, CEO of Condé Nast, stated in an interview with TBPN last month that the company has forecast declining search traffic for three consecutive years, with actual declines each year exceeding expectations.

"Last year, I asked my team to assume there would be no search traffic in the future and to plan all our businesses around a scenario of zero search traffic," he said.

Despite Monday's sharp decline, Alphabet (ASX: GOOGL) shares are still up over 100% in the past year, significantly outperforming other global cloud service leaders. The company has survived and grown through major platform shifts before, most notably the transition from desktop to the smartphone era. Despite a relatively late entry into generative AI, it has established itself as a leading player.

In the last earnings call, Pichai credited increased user engagement to in-house smart features like AI mode and AI Overviews, which are key areas of investment for Google.

"AI continues to drive increased search usage, with search queries across the web reaching an all-time high," Pichai said.

However, Google's decision to enable AI Overviews by default means, as DuckDuckGo's Head of Policy, Kamyl Bazbaz, noted, the choice is not being placed in users' hands.

Google Search head Elizabeth Reid mentioned in a Bloomberg podcast episode in April, "There's a misconception that users want either AI or web search." "What we're seeing is that users want AI and web search combined."