Google · The Verge
Google hasn’t figured out how to make AI pay like its search engine
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Google says AI is boosting searches, but that activity isn’t translating into faster growth for the business that pays for it.
Key facts
- However, Google’s Search revenue growth slowed to 12 percent year over year in the third quarter, down from roughly 17 percent in the previous quarter
- That’s still substantial growth, but not the direction investors were hoping for from a company planning to spend about $200 billion this year on infrastructure, largely to support AI
- Google is currently expanding ads in AI Overviews and AI Mode, including internationally and across multiple turns of US AI Mode conversations
- This is the first major disruption that Google is facing to its core business in decades,” Nate Elliott, an eMarketer principal analyst covering AI and advertising, tells The Verge
Summary
Search queries are growing at their fastest rate in five years, Google parent Alphabet said in its earnings report last week. That’s still substantial growth, but not the direction investors were hoping for from a company planning to spend about $200 billion this year on infrastructure, largely to support AI. “This is the first major disruption that Google is facing to its core business in decades.” Chief Business Officer Philipp Schindler said currency effects were the biggest driver of the revenue-growth slowdown, alongside changes in spending by advertisers in particular industries.