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Google says AI chatbots are hurting its bottom line

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Google says AI chatbots are hurting its bottom line

The company may be losing its stronghold on discovery as more users turn to tools such as ChatGPT and Claude for answers.

Google said that the rising use of artificial intelligence chatbots, including its own AI answers, has impacted its core ad business, and could become an even bigger revenue impediment moving forward.

As part of parent company Alphabet’s Q3 earnings update last week, Google reported that search volume grew by 12% in Q3. That’s a much slower growth rate than Q2’s 17% growth or Q1’s 19% growth. The report also showed that the company’s search revenue was flat in Q3.

Google CEO Sundar Pichai initially said that the company’s evolving AI Mode search saw strong momentum and its AI overviews drive improved discovery and searcher engagement.

But later in the company’s earnings call, Google SVP Anat Ashkenazi said that while AI Mode usage is rising, the growth of these discovery options is having an impact on its ad business.

As per Ashkenazi: “It's worth noting that the strong growth in AI Mode queries had an impact because of the lower monetization we were seeing in AI Mode. To be clear, we feel very good about our trajectory here. Our ad experiments have shown promising results and we're now scaling ads within both AI Overviews and AI Mode to more users and more queries; including, as I mentioned, international markets and multiturn ads in the U.S.”

Google’s search results are declining over time. As more people use AI chatbots like ChatGPT and Meta’s Muse Google’s discovery usage could be impacted, even though the company has long held an unassailable lead in search.


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