New AI Industry Might Not Disrupt Legacy Technology Giants

It does appear that a partnership between the U.S. federal government and firms developing artificial intelligence is developing. Some examples include the executive branch championing the $500 billion "Stargate" infrastructure initiative led by OpenAI, Oracle, Japan's SoftBank, and the UAE's MGX.

More recently there were big deals to bring cutting-edge chips and data centers to Saudi Arabia and the UAE. 

Country	Deal Size / Commitment	Key U.S. Firms Involved	Main Components	Timeline / Notable Details
Saudi Arabia	$600 billion+ (total package)	Oracle, Google, Salesforce, AMD, Uber, DataVolt, AWS, Qualcomm	- Oracle: $14B, 10-year commitment - DataVolt: $20B in U.S. data centers - $80B in joint tech/AI projects - HUMAIN: up to $10B AMD, $10B Nvidia AI hardware - $5B AWS "AI Zone" - $300B in immediate deals - $1 trillion corridor by 2030 ambition	Announced May 2025; multi-year rollout 1, 2, 5, 7
UAE	$1.4 trillion (10-year UAE investment in U.S.);  $200B in tech/AI package	G42, Microsoft, Nvidia, Oracle, Cisco, OpenAI, SoftBank, BlackRock, Global Infrastructure Partners	- 500,000 Nvidia AI chips/year to UAE through 2027 - 5GW AI datacenter campus in Abu Dhabi (G42) - Stargate UAE: 1GW OpenAI-led facility - Reciprocal investment in U.S. data centers - $100B Global AI Infrastructure Investment Partnership (GAIIP)	Announced May 2025; phased through 2030 1, 2,  4, 6

President Trump also signed a series of executive orders to hasten the deployment of new nuclear power reactors, with the goal of quadrupling total U.S. nuclear capacity by 2050.

Energy Secretary Chris Wright told Congress that AI is "the next Manhattan Project,” warning that losing to China is "not an option.”

That might closely resemble several past efforts by the government to spur economic growth by supporting targeted industries. 

Industry/Initiative	Era/Date	Government Role/Support	Outcomes/Impact
US Arsenals & Manufacturing	1816–1861	Collaborative R&D, standardization	Advanced machine tools, standardized parts, global manufacturing leadership 2
Erie Canal	1825	State-funded infrastructure	Opened Midwest markets, spurred trade and local development 2
Pacific Railway Act (Railroads)	1862	Land grants, federal loans	Built transcontinental railroad, linked coasts, boosted commerce 2
Federal-Aid Highway Act	1956	Direct federal funding, infrastructure	Created interstate highway system, expanded commerce, advanced construction tech 2
Shipbuilding (WWII, renewed focus)	1940s, 2020s	Direct contracts, subsidies, tax incentives	Rapid industrial expansion, military and commercial shipbuilding 4
Cybersecurity (NIST Framework)	2013–present	Voluntary standards, collaborative development	Improved critical infrastructure security, public-private trust 3
CHIPS and Science Act (Semiconductors)	2022	Large-scale subsidies, R&D funding	Domestic chip manufacturing, supply chain resilience, tech leadership 4

All that might suggest something for technology investors. In addition to the many startups sure to emerge, some of which will have the opportunity to become quite important, existing technology leaders also will be leaned on by government. 

That suggests the normal computing market mechanisms, whereby a new era of computing creates new leaders, might be modified in the early AI era. As legacy firms Microsoft and Apple seemingly survived the transition form the PC era to the present, so other firms such as Alphabet, Meta and Amazon might survive the coming transition to the AI era as well. 

That might be fairly unprecedented, but will be assisted by the need for collaboration and support of the federal government to create a big new industry.

Is AI a "General Purpose Technology?" Your Assessment Might Hinge on That

Google's chief economist, Fabien Curto Millet thinks generative AI is "the most exciting thing technologically I've seen in my lifetime." 

We might disagree on the degree of importance, or the timing of impact, but lots of us believe AI is going to be a general-purpose technology, and that always leads to disruption. 

AI Chatbots are Displacing Some Search Traffic, but Less Than You Might Think

There now is clear evidence that AI chatbot queries are indeed displacing some amount of traffic to websites, as AI provides direct answers to questions rather than producing a series of links to content sites. 

On the other hand, the amount of displacement remains arguably small. 

Title	Date	Publisher/Author	Key Findings
AI Chatbots vs Search Engines: 24-Month Study on Traffic Trends	May 11, 2025	OneLittleWeb	AI chatbots (top 10) received 55.2 billion visits (Apr 2024–Mar 2025), up 80.92% YoY, but search engines saw 1.86 trillion visits—only a 0.51% drop. Chatbots account for just 2.96% of search engine traffic and about 1/24th of daily visits 2,8.
Chatbots Having Minimal Impact on Search Engine Traffic: Study	May 6, 2025	TechNewsWorld (citing OneLittleWeb)	AI chatbots have barely affected traffic to search engines; ChatGPT sees about 26 times fewer daily visits than Google. Despite growth, search engines remain dominant 1,8.
AI Chatbots Have Yet to Disrupt Search Traffic, Research Shows	May 16, 2025	Cognitive Today (LinkedIn)	Despite rapid adoption, AI chatbots have not significantly disrupted traditional search traffic. Google and other engines still dominate information discovery 5.
Traffic War: Chatbots vs Search Engines	May 19, 2025	MTSOLN	In March 2025, search engines handled about 163.7 billion visits vs. 7 billion for chatbots (23x difference). Chatbot traffic is surging, but search engines still vastly outpace them 7.
ChatGPT Impact on Google Search Traffic: What It Means [2025]	May 20, 2025	Writesonic	ChatGPT had 0.25% of Google’s search volume as of 2025, but is growing fast. Google’s zero-click results are rising, reducing clicks to websites, but chatbot impact on search traffic is still small 6.

It remains to be seen how content providers change monetization strategies. There are some ways they might seek new ways of partnering with search engines, such as “embedding” content within AI replies. 

In other cases, content owners are simply going to have to try to increase subscription revenues as an alternative to advertising support.  

Study/Report (Year)	Main Findings	Impact on Website Visits
Ahrefs & Amsive (2025)	AI Overviews cause 15–35% drop in CTR for organic results; up to 70% drop in specific cases 6,8.	Significant reduction in visits, especially for non-branded, informational queries.
Semrush (2025)	AI Overviews triggered for 13% of queries in March 2025; zero-click rates high for informational queries 4.	Increased zero-click searches; less traffic to source sites.
Forbes (2025)	AI Overviews cause 15–64% decline in organic traffic; ~60% of searches end with no click to a website 7,8.	Dramatic drop in referral traffic for many sites.
Ahrefs (2025)	0.17% of average site’s traffic comes from AI chatbots; some sites get 6–18% from AI referrals 3.	Modest direct traffic from AI chatbots, but large potential for some sites.
SparkToro (2024)	Google handles ~373x more searches than ChatGPT; 60% of Google searches end with no click 8.	Major diversion of traffic from websites to on-page AI answers.
Adobe Analytics (2025)	Generative AI traffic to retailers up 1,300% year-over-year, but still modest compared to other channels 1.	Increased traffic from AI sources, but not yet displacing major channels.

It's Just Economics: Useful Bandwidth Fast, for More, Versus Lots of Bandwidth, for Fewer, Over Time

Cost versus benefit, and cost versus benefit plus time to activate are the issues that traditionally bedevil policymakers trying to extend home broadband coverage in rural areas. Even when such programs are supposedly “technology neutral,” they rarely are, in practice. 

One recent example is the federal government's $42 billion BEAD program. While the program officially claims technology neutrality, it has maintained a strong preference for fiber-optic infrastructure that effectively discriminates against newer technologies like low-earth orbit (LEO) satellites and fixed wireless access.

This bias happens for several reasons. 

Traditional fiber deployments receive higher priority in grant evaluations, even when alternative technologies might serve rural areas more cost-effectively and quickly.

Cost-per-passing requirements could favor established telcos and cable companies with existing infrastructure in place.

While ostensibly neutral, technical requirements are often calibrated around fiber capabilities, making it difficult for satellite or wireless providers to compete on equal footing.

And then there is regulatory capture. Rural telcos often have established relationships with state broadband offices and federal agencies, having participated in previous subsidy programs like the Connect America Fund.

Programs prefer more "permanent" solutions (fiber) than platforms that can  be deployed affordably, now, even if less capable in terms of raw bandwidth.

In practice, these biases mean the BEAD program encourages states to overspend on high-end fiber optic infrastructure at the expense of platforms that would be cheaper and faster to deploy. 

The point is that satellite and fixed wireless solutions can often serve scattered rural populations more quickly and cost-effectively than fiber builds. And though bandwidth is more limited than fiber-to-home would provide, untethered access arguably meets existing needs quite well, allowing existing funds to connect more locations, faster. 

And yes, over the longer term, everyone agrees “fiber is the permanent answer.” But between then and now it arguably makes sense to connect as many as possible, right away, with useful levels of access. We can upgrade later as requirements change and platforms are upgraded. 

For most rural households, Starlink speeds, for example, are sufficient for the use cases most households have:

• Streaming: Netflix recommends 25 Mbps for 4K streaming, so Starlink's typical 100-200 Mbps easily handles multiple simultaneous streams

• Video conferencing: Most platforms require 1-3 Mbps for standard calls, 3-5 Mbps for HD video calls

• General browsing and email: These activities require minimal bandwidth

• Multiple device usage: With 100+ Mbps, families can simultaneously stream, work from home, and browse without significant issues