Google hasn’t figured out how to make AI pay like its search engine

Google's search queries are growing at their fastest rate in five years, but search revenue growth slowed to 12% year-over-year in Q3, down from 17% in the previous quarter, and paid click growth slowed from 13% to 8%. Alphabet shares fell about 14% as investors question the returns on its AI ambitions, with the company planning to spend about $200 billion this year on infrastructure largely for AI. Google's Chief Business Officer Philipp Schindler attributed the slowdown partly to currency effects and advertiser spending changes, but also acknowledged that AI Mode queries monetize at a lower rate than traditional searches. Analysts note this is the first major disruption to Google's core business in decades. Google argues AI is expanding the business, with most AI Mode queries being incremental and upper-funnel, and it is expanding ads in AI Overviews and AI Mode. However, advertisers cannot separately measure AI ad performance, and early research on ChatGPT ads suggests conversational ads may generate lower retail revenue per session than traditional search ads. While Google's existing business gives it room to experiment, the company has yet to prove its new search paradigm can pay as well as its traditional search engine.

(Source：The Verge)