The Startup Incentive Construct explains why startups often outperform established companies despite having fewer resources. The central idea is that older companies, while having advantages like money and experience, often misalign their incentives when addressing problems. They tend to adapt problems to fit their existing incentives, causing them to focus on the wrong issues and lose out to startups. Startups possess different incentives, giving them inherent advantages. Established companies often experience an “Innovation Hangover,” making it difficult for them to sacrifice current revenue for new opportunities.

In this piece, I explain why startups win, despite the efforts of older companies who challenge them in new areas they are pioneering. The older companies can come with money, experience and technology, but most times, they are solving problems, with the wrong incentives.

Consequently, they adjust the problems to accommodate their incentives and in the process, solve an entirely different problem, resulting to a loss. You read it from me: African and specifically Nigerian startups, you can win over the big players. Your incentives are different, and those are inherent advantages for you.

The established companies have what I have called Innovation Hangover which is an inertia to cannibalize existing revenue sources for new opportunities. See it this way: If you run a treasury operation in a bank which will yield $5,000 profit but your fintech unit (a subsidiary) can do the same for $200, would you dismantle that treasury unit, and allow the fintech unit to serve the public because one fintech startup has started offering the service for $200?

That is not what we do most times because of the revenue/profit hangover. So, what happens is this: to fix that problem, the bank has to create a new market friction, and try to solve it. Possibly, that new problem can yield for the bank $1,000 profit, and it can feel that it has innovated, and has challenged the startup on pricing. Indeed, it could offer more features and services than what the fintech startup is offering for $200.

Yet, that is not the original friction which the standalone startup went for. Typically, over time, the startup can still win because the incumbent is hanging onto the established profits, and solving entirely new problems. I have called this Startup Incentive Construct.

For more than two decades, Google has been the near-undisputed gatekeeper of the internet, guiding how billions access information. But a noticeable shift is now underway — one that could mark the beginning of a new era in digital search.

Google’s global search market share has fallen below 90% for the first time since 2015, underlining a growing disenchantment with its dominance, a mounting legal siege from regulators, and a wave of new challengers powered by artificial intelligence.

In March 2025, Google’s share of global search traffic dropped to 89.71%, according to figures from Statcounter — a continuation of a downward trend that began in October 2024. While that number might still seem unassailable, it represents a symbolic and significant threshold. Google has not dipped below 90% in almost a decade. And what’s emerging now isn’t a statistical anomaly, but a signal of a sustained shift.

On desktop devices, historically one of Google’s strongholds, the decline is sharper. From 87.65% in May 2023, its share has plummeted to 79.1%. In Europe, where regulatory scrutiny of Big Tech has long been fierce, Google’s desktop search market share fell even further to 77.78% as of March 2025.

At The Back of DOJ’s Antitrust Case

The numbers land at a precarious moment for Google. In the U.S., the Department of Justice is intensifying its efforts to dismantle what it calls an illegal monopoly. As part of its sweeping antitrust lawsuit, the DOJ is reportedly pushing for Google to sell major parts of its ecosystem, particularly its Chrome browser, arguing that its bundling with Google Search gives the company an unfair advantage by making it the default experience for millions.

Regulators allege that Chrome, Android, and exclusive agreements with Apple and other device manufacturers create a “self-reinforcing cycle” that locks users into Google products and blocks competition. If the courts agree, Google may be forced to sell or separate Chrome from its advertising and search business — a structural remedy that could radically alter the internet’s balance of power.

That legal threat coincides with real-world user behavior now beginning to reflect the cracks in that ecosystem. As users start turning off Google as their default, the company’s dominance is no longer assumed, and challengers are beginning to capitalize.

The AI Search Disruption

One of the most potent disruptions comes not from traditional competitors like Bing, but from the explosion of generative AI tools. OpenAI, in particular, has emerged as an unexpected rival in the search space — not through a search engine per se, but by fundamentally changing how users seek information.

With the launch of ChatGPT plugins and integration with Microsoft’s Bing, OpenAI has turned conversational AI into a de facto search layer. Millions now turn to AI tools to answer queries, summarize news, generate explanations, and even compare products — tasks that would have otherwise started with a Google search.

More recently, OpenAI began experimenting with its own web-browsing capabilities built into ChatGPT, directly challenging Google’s core function. Users increasingly rely on AI-generated responses instead of combing through links or ad-heavy search results. For many, it’s faster, cleaner, and less intrusive.

This AI-fueled behavioral shift is already reshaping search expectations. Google’s efforts to keep pace, including the rollout of AI-powered Search Generative Experience (SGE), have been met with mixed responses. Critics argue that Google’s results now feel cluttered, biased toward sponsored content, and overly engineered.

While AI is pulling users away from traditional search, the decline in Google’s market share is also being driven by a groundswell of privacy concerns, ad fatigue, and growing distrust of monopolistic platforms. European search engines like Ecosia and Qwant are experiencing surging user numbers. Ecosia, which donates profits to environmental causes and does not track users, reports a 250% jump in traffic since late 2024.

Microsoft’s Bing, despite years in Google’s shadow, is also regaining relevance — thanks largely to its integration with AI. Bing is now baked into Windows 11, Edge, and ChatGPT, creating new channels of discovery.

Even Apple long speculated to be building its own search engine, has intensified its efforts to reduce reliance on Google — especially as it faces heat over accepting billions annually to make Google the iPhone’s default search engine.

A Systemic Erosion, Not a Sudden Collapse

Some observers may dismiss a 1% dip as inconsequential. But when applied to the scale of the internet, where over 5 billion people use search engines, that shift represents more than 50 million users no longer defaulting to Google. And that number appears to be growing each month.

Many believe that the erosion of Google’s monopoly may not come from a single blow but from the cumulative effect of public fatigue, regulatory intervention, and evolving technology. However, the search giant is far from surrendering its crown. With nearly 90% of the global market, vast cash reserves, and technical muscle, the company remains a titan. But its grip is loosening — and that matters.

In a sweeping policy shift that could reshape the U.S. auto industry’s supply chain calculus, Commerce Secretary Howard Lutnick announced that vehicles with at least 85% domestic content will be fully exempt from the incoming auto tariffs set to take effect later this year.

That new threshold, while ostensibly neutral, leaves just one automaker in the clear: Tesla.

According to the latest figures from American University’s Kogod School of Business, only three vehicles currently meet the 85% domestic content benchmark — one variant of the Tesla Model 3 and two versions of the Tesla Model Y. Every other automaker, including legacy players like Ford, GM, Honda, and Toyota, falls short.

The new tariff structure is two-tiered: a baseline 10% tariff on all foreign automobiles and components, and a steep 25% rate for vehicles and parts that don’t meet local content minimums. While automakers can still apply for a limited-time rebate program to recoup some of the costs, the window for that assistance closes in two years.

Failing to clear the 85% mark now creates serious pricing and regulatory headwinds. Automakers will either need to rapidly reconfigure their supply chains — a costly and complex endeavor — or absorb the tariff burden at the expense of their margins and competitive pricing.

Policy or Favoritism?

The policy, while presented as a measure to bolster American manufacturing, is being met with skepticism across the auto sector and political spectrum. The decision to set the exemption bar at precisely 85% has raised eyebrows, as only Tesla meets that threshold today.

In fact, even the Ford Mustang, one of the most American cars by branding and legacy, doesn’t quite qualify. Nor does the Alabama-assembled Honda Passport. That few-percentage-point gap now determines whether a model is subject to hefty tariffs or not.

Tesla CEO Elon Musk, who has become a recurring presence at the White House in recent weeks, appears to have reaped significant political capital from those visits. While the company has posted sharp revenue declines, its profits fell 71% year-over-year amid public backlash tied to Musk’s political associations, Tesla’s stock jumped 10% after news broke last week of another regulatory rollback that favored the company.

The rollback in question: the end of a federal rule requiring automakers to report non-fatal crashes involving partially automated vehicles. The Department of Transportation announced that only Level 2 autonomous systems, like Tesla’s Autopilot, would be exempted from the crash reporting mandate. Musk had previously criticized the rule, arguing it unfairly cast Tesla in a negative light.

Industry safety analysts, however, warned that eliminating reporting requirements could reduce transparency, making it harder for regulators and consumers to monitor potential flaws in automated driving systems.

A Regulatory Pattern Favoring Tesla

Taken together, these moves reflect a broader regulatory climate that appears to increasingly accommodate Musk’s agenda. First, the White House moved to lighten the regulatory load on self-driving tech. Now, it has structured a sweeping tariff exemption around a domestic sourcing threshold that only Tesla currently meets.

Other automakers, like GM and Ford, which have long argued that global supply chains are essential to staying cost-competitive, now face urgent questions about their reliance on foreign components. Japanese and European manufacturers, even those that assemble vehicles in the U.S., may find themselves boxed out of tariff exemptions unless they significantly overhaul sourcing strategies.

Smaller EV startups that rely heavily on imported components from China, including Rivian and Lucid, will be particularly hard-hit. Many have yet to build deep domestic supply chains and may struggle to scale production under the new cost burden.

Business as Politics

The timing of the executive order — released late Monday evening alongside a White House fact sheet — has only added to the sense that business and politics are increasingly intertwined. The fact sheet confirmed the new tariff guidelines but did not address why 85% was chosen as the cutoff. Nor did it provide clarity on how domestic content will be verified or audited.

As scrutiny intensifies, critics say the administration’s close ties to Musk risk blurring the line between fair industrial policy and favoritism.

Whether these changes help revive domestic manufacturing or simply reward the most politically connected players are left to the future. What’s clear is that the road ahead for the U.S. auto sector now leads through Tesla — a company that increasingly shapes not just cars, but policy itself.

The executive order will be published in the federal register later this week, with further guidance expected for automakers and suppliers navigating the complex new rules. Industry leaders, meanwhile, are scrambling to assess how quickly they can restructure operations to avoid steep penalties — or whether, in today’s Washington, playing catch-up with Tesla is even possible.