AI’s platform wars will soon become browser wars, and advertising will play a major role.
OpenAI, Perplexity and other major players in alternative AI are putting browsers at the center of their next act. It’s a natural move, but one that is seminal for both companies. It will have major implications on how advertising will be sold, served, and measured in a AI-first internet.
Before the speculation takes off here’s what is real. Perplexity launched Comet last week for subscribers to its $200 monthly Max plan, and a few investors. Reuters revealed OpenAI’s plan for a web browser.
Niamh Burns is a senior research analyst with Enders Analysis. She said that owning the browser would allow you to secure the position of your search product and all of the benefits that come along with it (including your ads business). “The data advantages are huge if you have this kind of access to the user’s journey.” Each scroll, click, and query in the web browser becomes raw data for training their models. This behavioral feedback loop gives these platforms the edge in building more personalized, responsive AI systems.
Add more advertising to this structure and it will only make the flywheel spin faster. The more the browser learns, the more predictive it becomes. This makes the ad model more appealing to marketers looking for alternatives to the status-quo. Some marketers, frustrated by the power of the dominant ad platforms seem to be more than willing to embrace alternatives, as long as they are effective. For them, more platforms mean more negotiating power. It’s a land grab for AI companies — but it also offers a clear path to profit. Advertising remains one of few high-margin business models that can be integrated into an AI product.
For these Gen AI businesses, such as Perplexity or OpenAI, they are really interested in the interaction between users and the content, according to Janos Moldvay. He is vp of measurement for Funnel. “Google has a huge advantage in terms of bounce rates and how users scroll.
Both companies seem unfazed by this challenge. They seem to be embracing the challenge. Perplexity quietly has been building its own ad product for months. OpenAI has hired Fidji SIMO, a former architect of Meta’s ads business as well as Instacart’s CEO to lead its Applications Group.
Whether it’s training large-language models (LLMs), anonymousizing it, or using it to create synthetic data that can better allow agencies and brand to target. Nicole Greene, Gartner’s vp of analyst, research, and advisory, said that there is a lot potential.
Whether it’s for the better or worse, a lot of this potential depends on a more fundamental change: What happens when internet pages start to give way to answers? It’s too early to predict the full impact, but the trend is clear: an Internet where the answer – not the source – becomes the primary unit for value. This erosion is already visible on Google’s AI Overviews, where citations are still present but don’t always get the clicks they used to. The effect will only intensify as more Gen AI-native web browsers are released.
Debra Aho Williamon, founder and chief analysts at Sonata Insights, said: “It is a fundamental change in the way users will interact with content online.” “It does not mean that there will be any advertising.” I’ve found that a CEO won’t make a big announcement like that if they don’t have a better or different idea in mind.
She is referring to comments made by Perplexity CEO Aravind Srinivas who described the company’s browser’s role as a way for the chat experience to become the new center of gravity on the internet. As it expands into more digital experiences, other aspects of the web will start to take on its shape, including advertising.
Here is how: Let’s say someone wanted to know what to see and do in London over the weekend. Google used to return a list. The user would open tabs, scroll through pages and piece together a plan. In the AI-powered browser, the browser surfaces an curated answer that is personalized, conversational, and dynamic. Want more detail? Ask. Do you prefer alternatives? They appear.
This is not a new way of browsing. It’s a fundamentally new way to decode what’s important and who’s seen. More and more people are doing it. According to eMarketer, the number of users of generative AI in the U.S. is expected to reach 160 millions by 2029. This is more than half of the U.S. population and more than half all internet users
but building a browser looks very different today than when Google launched Chrome back in 2008. There is a thicket of regulations around data privacy and platforms.
EU antitrust regulators have been urged to investigate if Google’s integration generative AI in Chrome is causing irreparable damage to publishers. Next month, an American federal judge may rule that Google must provide website owners and YouTube creators with a “simple mechanism” for opting out of their content being used to train its AI product.
It is not yet clear whether these moves will result in meaningful guardrails for generative AI. What’s clear is that there are powerful forces within the industry who would rather these guardrails remain hypothetical; — or delayed so long as to be irrelevant.
OpenAI and Perplexity will be entering this terrain – competitive, chaotic, and already under scrutiny. For now, however, the logic is simple: control the signal, own the interface and reshape economics. Jesse Dwyer, Perplexity’s director of communications, responded to this article by telling Digiday that “if users lose this browser battle, it will come from a familiar playbook: a monopolistic, ‘everything’ company forcing their model onto everyone.” OpenAI’s product will be similar to Chrome’s in this regard.
OpenAI has not responded to Digiday’s comment request.
https://digiday.com/?p=583098
