A small operation in terms of number of developers yes. But not being able to subsidise user growth means they will never be able to build their own full web index as the fixed cost of doing that is too high for a small number of users.
As a consequence, they will always be at the mercy of Google/Bing. The range of things they can innovate on will always be limited. And the situation can only get worse as people start to expect more AI functionality.
I doubt that you can build a sustainable niche product if the effort you have to put into it is just as big as if you're building for billions of users. Having few users is not what defines a niche. Niches are defined by specialisation.