AI search earns Google less and sends fewer readers onward, while Reddit moves to require a login
Google admits that AI Mode queries bring in less advertising revenue, and Reddit is seeing its traffic from Google fall by more than a million visits a week.
The shift to AI-powered search is starting to show in the numbers, both at Google and at the websites that depend on its traffic. Presenting the quarterly results of parent company Alphabet, chief business officer Philipp Schindler said an AI Mode query earns less than a comparable classic search because it carries fewer and cheaper ads. Ars Technica reports that Google is therefore showing more ads in AI Mode, including in more countries outside the US, and in the US is letting ads shift along with the conversation.
Investors reacted sharply. Alphabet shares lost roughly an eighth of their value on Thursday, the biggest drop in the company's history according to Heise. Besides weaker revenue from AI search, the enormous spending spree weighed on the stock: Google spent 51.4 billion dollars on servers and data centres in the third quarter, The Register reports, and according to Ars Technica is targeting more than 300 billion dollars next year.
On the other side of the search engine, Reddit is feeling the effects. Chief executive Steve Huffman said on the earnings call that in his view AI Mode does not send traffic, neither to Reddit nor to anyone else, The Verge reports. In October, referrals from search engines fell by more than a million a week on average. TechCrunch writes that Reddit is therefore moving to a platform that visitors will largely have to log in to use, which better shields its data from AI scrapers and makes logged-in users more valuable to advertisers. Daily US users fell to 50.7 million in the third quarter.