Google is simultaneously the most dominant and most vulnerable it has ever been

TL;DR

Google posted its fastest revenue growth since 2022 and still controls 90 per cent of search, but talent defections, rising competitors, antitrust remedies, and its own AI transformation are eroding the foundations of its dominance. ChatGPT has hit one billion users, Bing has reached the same milestone, and DuckDuckGo installs are surging.

Google’s financial performance has never been stronger. Alphabet posted $109.9 billion in revenue in the first quarter of 2026, up 22 per cent year on year, the fastest growth rate in any quarter since 2022, with search advertising revenue climbing 19.1 per cent and queries hitting an all-time high.

And yet the week before these numbers were published, the company’s stock had its worst day in over a year, falling roughly 7 per cent after two of its most prominent AI researchers defected to rivals. The paradox captures the strange position Google now occupies: it is winning on every metric that matters to Wall Street while losing ground on the ones that will matter in five years.

The talent exodus

The departures that spooked investors were not minor hires. Noam Shazeer, a vice president of engineering who co-authored the 2017 “Attention Is All You Need” paper that introduced the Transformer architecture, left to join OpenAI.

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Days later, John Jumper, a Nobel Prize laureate and Google DeepMind vice president who created the protein-folding system AlphaFold2, departed for Anthropic. The back-to-back exits reportedly erased roughly $250 billion from Alphabet’s market capitalisation.

Competitors are growing

ChatGPT surpassed one billion monthly active users in May 2026, making it the fastest app in history to hit that milestone, according to Sensor Tower estimates reported by Reuters. It consistently ranks as the top free app on Apple’s iOS store, with Anthropic’s Claude reportedly sitting in eighth place, one spot behind Google’s own Gemini.

Microsoft’s Bing reached one billion monthly active users for the first time last quarter, though its global search share remains around 5 per cent, suggesting many of those users are low-frequency or using Bing as a default. DuckDuckGo’s install rates have surged since Google’s I/O announcement in May, with growth peaking at nearly 70 per cent on iOS devices as users seek alternatives to AI-saturated search results.

Google’s own AI problem

The competitive threat is compounded by a structural one. Google’s I/O keynote in May unveiled a vision of search built around AI agents rather than the blue links that have defined its advertising model for two decades, a transformation the company says is necessary but one that risks undermining the economics that fund it.

AI Overviews now appear in roughly half of all search queries, and studies show an average 34.5 per cent drop in organic click-through rates when they are present. Google says AI Overviews monetise at a rate similar to traditional search, but the company’s own network advertising revenue, which depends on traffic flowing to external publishers, fell 4 per cent in the first quarter.

The regulatory squeeze

Google’s search share has slipped from 92.9 per cent in 2023 to roughly 89.6 per cent, the steepest decline in its history, and a US federal court has ruled that the company illegally maintained its search monopoly through exclusive default agreements. The remedies imposed in September 2025 banned exclusive distribution contracts and introduced a data-sharing requirement, though the judge rejected the Department of Justice’s request to force a divestiture of Chrome.

Both sides have appealed, with oral arguments expected in late 2026 or early 2027. Morgan Stanley analysts have estimated that mandatory choice screens alone could cost Google 5 to 8 per cent of its search traffic over three years, translating to $15 to $25 billion in annual advertising revenue at risk.

The open web question

The broader concern is what happens to the internet Google built. Nearly 60 per cent of Google searches now end without a click to any external website, and courts in Germany have already ruled that Google bears liability for the content its AI Overviews surface.

Publishers who once depended on Google for traffic are watching their referrals shrink as the company absorbs their content into AI-generated answers. The open web that Google’s advertising model was built to monetise is being hollowed out by the very AI features Google says it needs to stay competitive.

Google is betting that it can navigate the antitrust remedies, retain enough talent to stay at the frontier, and build an AI-first search product that still sells advertising at the same rates. It is simultaneously the most profitable search company in history and the one with the most to lose from the way search is changing.