Even in this conservative case, ChatGPT could seriously erode Google Search revenues. That alone would be a massive disruption and Google wants to ensure they end up as the Google in that scenario and not the Lycos, AltaVista, AskJeeves etc. etc.
Panicking, and therefore making horrible design and product choices.
Google has made their main search engine output utter and complete junk. It's just terrible. If they didn't have 'web' search, I'd never be able to use it.
In almost every search for the last month, normal search results in horrible matches. Switch to web? Bam! First result.
Not web? The same perfect result might be 3 or 4 pages deep. If that.
(I am comparing web results in both cases, and ignoring the also broken 80% of the pages of AI junk.)
In an attempt to compete, they're literally driving people to use ChatGPT for search in droves.
They could compete, and do so without this panicky disaster of a response.