In a groundbreaking move set to redefine its revenue model, Google is reportedly preparing to charge users for AI-enhanced search features.
In a groundbreaking move set to redefine its revenue model, Google is reportedly preparing to charge users for AI-enhanced search features. This prospective transformation, as experts suggest, arises from the substantial costs associated with providing such services. If implemented, it would mark a significant departure from Google’s longstanding tradition of offering its search engine for free.
According to reports disclosed by the Financial Times, Google’s proposed strategy involves offering its advanced search functionality exclusively to users subscribed to its premium services. These premium services currently encompass various Google tools, including artificial intelligence (AI) assistants integrated into platforms such as Gmail and the office suite.
The experimental search experience, currently undergoing beta testing for selected users, utilizes Google’s generative AI to furnish responses to queries in a conversational manner, akin to the approach adopted by ChatGPT and other competitors.
Heather Dawe, chief data scientist at the digital transformation consultancy UST, remarked, “AI search is more expensive to compute than Google’s traditional search processes. So in charging for AI search, Google will be seeking to at least recoup these costs.”
The exorbitant expenses associated with AI are predominantly attributed to the computational power required for training state-of-the-art generative models. Amazon reportedly incurred a staggering $65 million for a single training run in the past year, indicating the enormity of these costs. Industry experts foresee this expenditure surpassing the $1 billion threshold in the near future.
Last week, OpenAI and Microsoft unveiled plans for a $100 billion data center dedicated to AI training. Additionally, Mark Zuckerberg expressed intentions to allocate at least $9 billion solely for Nvidia GPUs in January.
However, it’s important to note that training AI models represents only a fraction of the overall expenses within the sector. Brent Thill, an analyst at Jefferies investment firm, emphasized that a substantial portion of AI expenditure is directed towards the operation, rather than the training, of models. This includes the process of inferencing, where an AI model is queried, which accounts for over 90% of current AI compute spend.
In response to Google’s prospective move, competitors in the AI search domain are also offering subscription-based models. Perplexity, an AI-powered search engine, provides a $20 monthly “pro” tier granting access to more robust AI models and unlimited usage.
Conversely, some players in the market continue to offer AI features at no cost. Microsoft’s Bing integrates AI features free of charge but confines them to the company’s Edge browser. Similarly, the browsing and search startup Arc currently offers its services to users for free, with plans to monetize through charging companies for business-centric features in the future.
The impending shift towards subscription-based AI search models reflects the industry’s acknowledgment of the substantial costs involved in delivering advanced AI capabilities to users. As companies navigate this evolving landscape, the adoption of subscription models appears to be a viable strategy to offset rising expenses while ensuring sustainable growth and innovation in the AI domain.