The Ecosystem Advantage: Part 2
While explaining Alphabet’s “ecosystem advantage”, I mentioned “the real advantage of Google is its ability to monetize Gemini through ads even though they are not putting ads on the core Gemini chat bots itself.” To say it differently, I consider it exceptionally likely that Google will insert ads in the short to medium term everywhere in its ecosystem of products except on the core Gemini app. Ultimately, it is only a matter of when, not if, that ChatGPT may feel pressured to launch ads in their app which can give Google another opportunity to gain further market share by pointing out their ad-free chat experience on Gemini. Eventually, when or if consumer habit graduates from traditional search and Gemini gains a material percentage of query share (relative to traditional Google search), we will likely see ads on Gemini as well, but I expect it to be the one of the last places where Google will insert ads.
In that earlier piece, I also mentioned about “CC” feature in Gmail. I have an upcoming short trip to Miami and since Gmail already has my flight details, notice how the “CC” AI feature is suggesting me to book hotels during the trip (see below image). It may be obvious, but let me explicitly mention the key distinction between ChatGPT and Google here. Unless I personally query anything about my Miami trip on ChatGPT, ChatGPT will never know anything about this trip. On the other hand, even if I don’t Google or ask Gemini anything Miami related, Google will still know where I am going (through Gmail, Maps, Android etc.) and hence can show me appropriate ads in other surfaces beyond the chat bot. In this sense, the rest of the world tries to give Google various context about my life to Google whereas it is only me who can provide such context to ChatGPT, so if/when I don’t provide such context, ChatGPT can remain blind. Again, as mentioned in my earlier piece, if you’re top 1-5% of ChatGPT users, ChatGPT will have pretty deep understanding of who you’re, so these questions are particularly relevant for the ~90-95% of users.
Moreover, Google had a slew of press releases in the last couple of days which I will discuss behind the paywall.
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