AI x Commerce: Is Google Screwed? Maybe. But Not How You Think.
Plus: Inside the $13T Mortgage Machine
AI x Commerce
by Justine Moore and Alex Rampell
Is Google Screwed? Maybe. But Not How You Think.
The internet’s most profitable business model has always been simple: running search ads on monetizable queries. When you search “how many protons are in a cesium atom,” Google makes no money. When you search “best tennis racket,” it prints cash.
This asymmetry defines the entire search economy–some queries are pure curiosity, and others have direct purchase intent. It’s part of why Google (where people often search for products) is a $2T company and Wikipedia (where people search for knowledge or fun facts) is a non-profit.
Google could lose 95% of search volume and still grow revenue –as long as it retains the valuable queries, which are largely commerce related. Has Google managed to keep these searches from moving to AI platforms like ChatGPT and Perplexity?
Maybe. In May 2025, Apple SVP Eddy Cue testified during the DOJ’s antitrust trial that Safari search volume had declined for the first time in over two decades. The result? Alphabet’s stock dropped nearly 8% in a day, wiping out over $150 billion in market cap — all from the hint that queries might be leaking to AI. But fast forward to Google’s increasing revenue (including from search!) and it’s pretty clear (squaring Eddy Cue’s comments with Google’s Q2 earnings) that Google is likely only losing low-monetizing queries, at least for now.
AI is eating the low-value (at least in “cost-per-click terms”) queries first, the ones with no commercial intent that are more informational. If language models answer your cesium question, Google loses the query but not a dime. The revenue remains until AI starts replacing things like “best X for Y” commerce journeys — the ones with actual purchase intent. There’s no question this is about to happen, but not all commerce is the same. Some commerce will be eaten by AI, some will be immune to it, and some will be up for grabs by new startups.
Defining “Commerce” and its AI Opportunities
We can split purchases into five rough categories, ordered by level of consideration:
Impulse buy – think the chocolate bar in the checkout line of the grocery store or a funny t-shirt you see on TikTok Shop. You don’t know you need these items in advance and don’t do any research.
Routine essentials – think groceries, dog food, cleaning supplies, diapers. You might do a bit of research the first time you buy something, but it’s more likely you grab what’s convenient + reasonable.
Lifestyle purchases – think nice skincare, a fancy bag, or home decor. These things that you don’t need, but you want. You’ll likely do some research before buying, but it will likely be searching online and reading reviews.
Functional purchases – think a commuting or mountain bike, furniture, or a new laptop or phone. These items are expensive for most consumers and involve a fair bit of research – often visiting one (or multiple) stores and consulting with experts.
Life purchases – think a house, wedding, or college degree. These are highly considered purchases that typically involve months of research and seriously evaluating several possible options.
More from a16z Fintech
Inside the $13T Mortgage Machine
Angela Strange, Tim Mayopoulos, Andrew Wang, and Mike Yu
The $13T U.S. mortgage market serves 50M homeowners but still runs on decades-old software.
In this episode, a16z GP Angela Strange hosts Tim Mayopoulos (ex-CEO of Fannie Mae and ex-president of Blend), Mike Yu (co-founder and CEO of Vesta), and Andrew Wang (co-founder and CEO of Valon) to unpack why standardization and regulation slow change, and how modern loan-origination and servicing platforms, cleaner data, and AI can cut costs, boost transparency, and reduce errors. They also discuss policy levers that could speed innovation and what a true one-tap mortgage could look like.
Law & Order: GPU
I’ll start by saying I’ve never even watched Law & Order, or Law & Order SVU for that matter. But I’m committed to out-punning and out-90s-pop-culture-referencing my partner Joe on all of our respective content. So I hope this resonates.
I’ll continue with a warning: the below is not a market map. Instead, I’d like to summarize my key learnings on Legal AI, having met many startups and software buyers focusing on it over the past 18 months. While I don’t expect these learnings to be revelatory, I’ve come to believe they are the forces–sometimes subtle and nuanced, other times glaringly obvious–underpinning the market structure as it exists today.
General Partner David Haber joined BloombergTV to talk about how fintech has evolved and where the most important opportunities are today.
Recent Investment News
Salient is an AI-first workflow automation platform for lenders. The company builds AI agents to handle borrower interactions across voice, text, email, and chat. By automating routine workflows like payment collection, payoff processing, and insurance updates, Salient enables lenders to improve their customer experience while substantially reducing servicing costs.
Rillet is building the AI-native enterprise resource planning (ERP) system — a self-driving finance system designed from the ground up for speed, intelligence, and automation. The platform combines a modern ledger and streamlined accounting workflows with specialized AI agents that actively manage financial operations, rather than passively recording them.
Recent M&A Deals and Market Intel
IPO activity remains strong. Klarna priced its IPO on September 9, raising $1.4 billion by offering 34.3 million shares (85% secondary) at $40, exceeding its $35 to $37 range. The stock gained 14.6% on its first day. Figure priced its IPO on September 10, raising $788 million by offering 31.5 million shares (25% secondary) at $25, above its upwardly revised range of $20 to $22. The stock rose 24.4% on its first day. Additionally, Lendbuzz filed with the SEC on September 12 to raise an estimated $250 million in an IPO.
Thomson Reuters announced its acquisition of Additive on September 16. Additive uses AI to automate tax document processing for tax & accounting professionals and will complement Thomson Reuters’ existing tax workflow automation capabilities.
Airwallex announced its acquisition of OpenPay on September 3. The company will harness OpenPay’s platform to deliver billing, payment orchestration, and revenue analytics tools that compete directly with players like Stripe Billing.
Gusto announced its acquisition of Guideline on August 27. The two companies have been partners since 2016 and Gusto was Guideline’s first fully integrated payroll partner.
You are receiving this newsletter since you opted in earlier; if you would like to opt out of future newsletters, you can unsubscribe immediately.
This newsletter is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. This newsletter may link to other websites and certain information contained herein has been obtained from third-party sources. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation.
References to any companies, securities, or digital assets are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by a16z. (An offering to invest in an a16z fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund which should be read in their entirety.) Past performance is not indicative of future results.
Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Content in this newsletter speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see disclosures for additional important information.
Join my New letter, where I delivers fast, research-driven insights on crypto, markets, macro and frontier tech
https://substack.com/@orbisceleris
Had a suspiciously similar take on Twitter 4 months back :)