Gerstner notes Google compounded at similar rates to other platforms despite his early worries about search's future.
“And I was talking of I was worried about the future of search and the future of vertical search starting in 2010, But look at Google's compounded at about the rate the other big platforms have in The US.”
Gerstner says Facebook became Altimeter's largest position in 2012 and remains so today based on shift from search.
“Facebook became our largest position in 2012 while we managed the position over a period of time, it's still our largest position in the fund today.”
Gerstner's core Google insight was search volume and revenue per search would both increase over time.
“The high quality insight was simply that Google was going to do more searches in the future than they did in the past and that the revenue per search was going to go up over time.”
Gerstner warns that companies relying on Google's search ecosystem face potential value destruction from AI disruption.
“You're not gonna have to search through 10 blue links. And so, yes, a lot of the companies that were beneficiaries of the Google ecosystem are now suspect.”
Gerstner predicts the shift from searching web pages to conversational chat agents that directly answer questions.
“The world is headed in a place where we're just gonna chat our questions. We're gonna say, how do you make a French omelet?”
Gerstner says top tech leaders now believe the $20 trillion web search market is up for grabs.
“And I will tell you that the conversation around that table, there's increasing confidence that whatever comes next, right, the top of the funnel is up for grabs,”
Gerstner says there's growing confidence that search dollars will redistribute over 5-7 years, even Google must cannibalize search.
“And make no mistake, Google is well positioned to make its claim for that, but its claim is going to come at the expense of search.”
Gerstner characterizes Google as a monopoly that has been a tax collector on the Internet for twenty years.
“Google has been a monopoly, a tax collector on everything on the Internet for twenty years.”
Gerstner characterizes Google as a twenty-year monopoly tax collector on the Internet with monopoly search pricing.
“Google has been a monopoly, a tax collector on everything on the Internet for twenty years. Okay? And they have monopoly pricing on search.”
Gerstner says Google's query growth had already slowed to 4% annually before AI, with 10 billion queries daily.
“And so the first thing that we just say is that the basing engagement, even before AI had slowed down a lot, because you're already at 10,000,000,000 queries a day.”
Gerstner states Google processes 10 billion queries daily, more than one per human globally.
“So, you know, a couple queries are more than a query for every human on the planet, and it has the most efficient system in the world for doing that.”
Gerstner argues users are shifting from Google's ten blue links to ChatGPT, Claude, and Apple Intelligence.
“Because people are going to turn to Apple Intelligence instead of 10 blue links to find answers to the questions they have.”
Gerstner's survey work shows people are turning to ChatGPT, Claude, and Apple Intelligence over traditional search.
“We do lots of survey work on this, Scott. People are turning to chat GPT, they're turning to Claude, they're turning to, why are we so excited about Apple Intelligence?”
Gerstner reports organic search traffic down 20-40% as companies push AI-embedded answers above traditional results.
“They're saying organic search is down 20 to 40%. Why? Because they're putting AI on top of it. They got to push it down the page.”
Gerstner says OpenAI reached 400 billion annual searches eight years faster than Google.
“I saw some analysis from my team this week will post that OpenAI reached, you know, 400,000,000,000 annual searches, eight years faster than Google. Right? So they're doing over a billion searches a day now.”
Gerstner states Google consumed 98% of all upside in search despite 20 competitors with good technology.
“Google had a lot of competitors. 20 competitors in search. They all have pretty good technologies, but Google consumed 98% of all the upside ever associated with search.”