We’re Getting a New Browser

How OpenAI’s new browser could upend digital ads and challenge Google

Earlier this week, Reuters reported that OpenAI plans to release its own version of a web browser to compete with Google Chrome in the coming weeks. Some key features of this AI-powered browser include a chat interface and native AI agent integrations.

I’ve written a few pieces about how AI has upended traditional search behavior, but this is development is on a whole different level. By the looks of this report, it seems that OpenAI is creating an entirely new web experience, not simply only a new search experience. Talk about grand ambitions.

Reimagining the browser could be the biggest shake-up in tech since the creation of the internet itself. As people and companies embed AI into daily lives and operations respectively, the portal to the internet (web browsers) should also get an AI upgrade. Since OpenAI has 500 million weekly active users, it’s quite plausible that they can sway online behavior quickly towards this new technology.

OpenAI’s browser may operate nothing like the typical browsers we’ve grown used to. It’ll likely blend the chat interface (ChatGPT) with AI agent development (Custom GPT builder) in a way that allows users to create a highly personalized internet environment. You’ll have only the most relevant news delivered to you, and your emails will be synthesized, and replies will be drafted, waiting for you to press send. And who knows how social media will come into the fold. OpenAI may be building a whole new meaning to the phrase “Super App”. But I’m speculating here.

A notable callout from the Reuters report, “OpenAI's browser is designed to keep some user interactions within a ChatGPT-like native chat interface instead of clicking through to websites.” The key word here is “some”, implying that while many interactions may stay within ChatGPT, others will still involve clicking through to websites. Or at least, that’s how I’m interpreting it. Which makes me question whether I’m going too far on how drastically different the OpenAI web interface may be versus Google Chrome or Mozilla Firefox. I can go on and on about what this web browser will and won’t look like, but I’ll save that for another piece.

Let’s discuss the elephant in the room: Google. Google search growth has slowed, and a compelling new browser could further dent its dominance. That shift has serious downstream implications for Google’s core business: advertising.

Sam Altman (OpenAI founder) recently said he’s open to advertising which consequently means that Google’s behemoth advertising business is on the hot seat. An OpenAI web browser would be a direct competitor to Google, who boasts tens of billions of dollars per quarter in advertising revenue.

Yet, Altman has been clear that creating a strong advertising user experience is a difficult thing to do and OpenAI will be deliberate when introducing ads into their chat interface. Still, I suspect OpenAI will launch ads sooner rather than later to offset the steep costs of running ChatGPT (estimated at $3–4B per year) and push the company to grow into their recent valuation ($300B).

We talked about AI’s impact on the advertising ecosystem in AI is Changing Customer Acquisition, and it’s worth diving deeper with this announcement. I see an imminent bifurcation of who ads are served to, being both humans and AI agents. If OpenAI embeds AI agents (think personal shopping agents) into the browser, it begs the question of who the ad really needs to serve. Soon, I believe we will rely more on AI agents day-to-day shopping for us based on pre-defined guardrails we set. Thus, monotonous commerce will fall into the hands of a new customer, AI agents. It’ll be fascinating to see how brands think about splitting ad budgets between selling to humans over AI agents.

Advertising to AI agents will likely look quite different than advertising to humans. Algorithms don’t need to be entertained, so catchy videos won’t sway them the way they do humans. A whole new advertising ecosystem will be built upon catering to the backend systems and interfaces that AI agents will rely on to transact.

This could reshape the advertising funnel entirely. I could see an environment where human advertising will be entirely for awareness and consideration purposes, while AI agent advertising will be focused on conversion (direct response). This pairs well with my theory on the distinction between monotonous commerce vs. discovery commerce.

Candidly, my bet is that OpenAI introduces a bidding model where advertisers hand over budgets and let the algorithm decide whether to target humans or agents. You hand over a sum of money to OpenAI and let them do the work for you. Similar to Meta’s Advanced Shopping Campaigns or Google’s Performance Max structure.

From a front-end advertising perspective, my guess is that OpenAI will show a subtle sponsored placement in the chat interface. They already have a benchmark in the market with Amazon introducing ads into their AI chatbot, Rufus. Personally, I’ve found Rufus ads miss the mark, and from what I’m hearing, brands feel the same. A friend recently told me their Amazon x Rufus campaign was “wildly inefficient.” So, the product isn’t there yet. Given Altman’s cautious tone towards advertising, I bet that when OpenAI introduces advertising into ChatGPT, these ads will be relevant to the user.

OpenAI’s announcement can’t be great for Google’s search business. Or… is it the best thing that could happen to Google? The big tech player has been perennially under fire for an alleged monopoly of the Search market and would likely relish the opportunity to get anti-trust regulators off their back. Google’s been under antitrust fire for years, and a credible threat from OpenAI could be just the cover it needs.

Although Google’s revenue is majority driven by search advertising, I’m bullish on a Google break up. While search still drives most of Google’s revenue, YouTube and Waymo are not only fast-growing, but also turning into (if not already) behemoths of their own. A YouTube or Waymo spin-off would likely trade at a much higher multiple than Google’s mature (and under threat) search business.

Wrapping this up: as a tech enthusiast, I think we’re in the early innings of a major shift in how we use the internet. The game’s just getting started, and I’m here for it.