[k_kelly]

It’s far more 5D chess than that.

Search costs nothing to run relative to ad revenue. Microsoft makes each query require 100x the cpu usage because users expect an LLM answer for results.

Microsoft’s share of search goes from 1% to 5%. Their cost go up but their sale of ads increases and they get valuable IP.

Google loses 5% share of market but its costs go up 100x.

Google can no longer finance its other bets like Cloud so effectively.

Microsoft meanwhile has a more compelling cloud offering.

Google starts to lose more ground on Cloud.

Amazon (not an AI company) lose ground to both.

Classic Art of War, if your opponent is strong, attack somewhere they are weak.

[sgu999]

Is your point that MS is diversified enough to absorb the losses of eating up Google's share in search even with the now higher costs?

[k_kelly]

Microsoft can afford to make a less profitable product for search than Google because if Google competes it’s a net win for Microsoft.

AI has many other profitable uses for Microsoft but specifically using it to compete with Google Search seems like a poison pill.

[VBprogrammer]

The point, as I understand it, is for Microsoft the additional cost of making their search return results as a LLM is pretty small as compared to their overall business.

However, they will force Google's hand into moving their whole search load over to LLM to avoid loosing market share to Bing. This will cost Google a lot more as search is a much bigger part of their business.

It's an interesting theory but I wouldn't know enough to evaluate how likely it is.