if its individually paid, you don't have privacy.

FOSS and paid are not mutually exclusive, but Kagi is not FOSS and of dubious transparency/trustworthiness.

Also Kagi is not operating a search engine, but a search aggregator mostly dependent on Google. They don't need much upfront capital to operate.

An actual search indexer competitive with Google is too expensive to be profitable without (tens of) millions of paid users or hundreds of millions of free ones (i.e. bing and maaaaybe yandex?).

True google alternatives are therefore only going to come out of big capital (MSFT), or less likely a government (EU?) funded company. There might be an argument to be made for decentralized search as well, but the only actual contender in that field right now is a crypto thing that probably relies mostly on bing/google. Still, a decentralized open indexer may actually make some sense in theory.

If I wanted to pay to talk to people, I'd go to a therapist.