AI Answers Are Changing How Search Connects People To The Open Web

🔍 Read the full analysis: AI Answers Are Changing How Search Connects People To The Open Web on ThorstenMeyerAI.com

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Alphabet’s business chief Philipp Schindler said October 28 that fast growth in Google’s AI Mode had weighed on Search revenue growth because the queries were bringing in less advertising revenue. The disclosure came as Alphabet reported that Search & other revenue rose 12% to $63.35 billion in the third quarter, leaving the size of AI Mode’s effect unspecified.

Schindler made the comments during Alphabet’s earnings call, responding to JPMorgan analyst Doug Anmuth, who asked why search queries were growing at their fastest pace in five years while revenue growth had slowed. Schindler named currency exchange rates as the largest factor behind the slowdown relative to the previous quarter. He also cited changes in spending by some Asia-Pacific retailers and a normalization in media spending after the football World Cup, before mentioning AI Mode’s lower monetization.

“The strong growth in AI Mode queries had an impact because of the lower monetization we were seeing in AI Mode,” Schindler said. He added that Google felt good about its trajectory. The remarks confirm that AI Mode queries were earning less than the comparison implied by the discussion, but Google gave no dollar estimate for the impact and did not say that Search revenue declined.

Alphabet’s quarterly filing, submitted October 29, did not mention AI Mode. It attributed Search growth to more queries, advertiser spending and improvements to advertising formats and delivery. Separately, Alphabet’s Class A shares fell 12.6% on October 29, according to Fortune, their steepest one-day decline since the company’s 2004 listing. Reports put the decline in market value between about $475 billion and $500 billion; the source material does not substantiate a 15% closing fall.

AI Answers and the Click Economy

The financial question is whether Google can make money from answers that satisfy a search without sending a user to an advertiser or publisher. If AI Mode grows faster than its advertising yield, it could change the economics of a business that has relied on ads beside search results. Schindler’s comments identify that tension, but do not establish its scale or show that AI Mode caused the overall slowdown by itself.

For publishers, a separate concern is whether an answer shown directly on Google reduces visits to the websites that supply information. Chartbeat data cited in the source material show Google Search’s share of pageviews across its publisher network falling from about 9% in July 2024 to 5% in July 2026. Pew research cited there found users clicked a result in 8% of searches with an AI summary, compared with 15% without one. These figures describe different measurements and do not, on their own, establish that AI summaries caused the broader traffic change.

Forums and retailers face different risks. Reddit CEO Steve Huffman said AI Mode does not drive traffic to Reddit or, as far as he knew, to other sites. For shops, Google’s checkout arrangements could allow a purchase without the shopper visiting a retailer’s website. Taken together, these developments make the path from a search answer to a third-party site—and the value of that visit—a central issue for publishers, businesses and Google.

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Search Revenue Versus Website Visits

Google’s AI Mode is a chat-style search experience that can present synthesized answers and follow-up interactions. The company said AI Mode queries are three times longer than traditional search queries and that overall query growth is the fastest in five years. Longer conversations may create more opportunities to serve ads, but Schindler’s comments indicate that, at the time of the call, AI Mode queries were less monetizable. Google has said it plans to place more advertising within AI answers.

The question of outbound traffic has also appeared in Google’s public statements. In July, Google said its AI features sent “billions of clicks to websites every week.” The October earnings call did not include a new click figure. The source material also reports that Google’s checkout standard covers hundreds of thousands of brands, and that more than 400 publications take part in a licensing pilot. These initiatives illustrate that Google’s relationship with content providers includes traffic, licensing and commerce—not advertising alone.

Rules and disputes are developing alongside the product. The UK requires Google to offer an AI opt-out, according to the source material; the European Union is investigating, and five French publisher groups filed a complaint on October 29. Those developments concern how AI search uses and presents information, but their eventual effects on traffic and revenue remain unresolved.

“The strong growth in AI Mode queries had an impact because of the lower monetization we were seeing in AI Mode.”

— Philipp Schindler, Google’s business chief, on Alphabet’s October 28 earnings call

The Missing Revenue and Click Figures

Google has not disclosed how much less revenue an AI Mode query generates, how much the feature changed quarterly revenue growth, or what portion of the slowdown it accounted for. Schindler named currency movements as the largest factor relative to the prior quarter and listed other contributors, so the comments do not support attributing the slowdown solely to AI Mode.

It is also unclear how many visits Google’s current AI experiences send to websites, how those visits compare with traditional search referrals over the same period, and how the figures vary by publisher or topic. Chartbeat and Pew figures cited above measure different things and cannot be treated as a single causal estimate. Google’s July click statement has no updated counterpart in the earnings-call material.

The October 29 share-price decline is confirmed in the cited reporting, but it should not be read as a market verdict on AI Mode alone. Reports also cited Alphabet’s cash flow and spending: free cash flow was negative $9.1 billion, compared with an analyst expectation of roughly negative $2.7 billion, while quarterly spending on data centers and chips reached $51.4 billion. The relative weight investors gave each concern is not established here.

Google’s Next Traffic Disclosure

The clearest next evidence would be an updated, comparable account from Google of clicks sent to websites by AI features, alongside information about how AI Mode advertising performs as usage grows. Until then, the company’s earnings comments establish lower monetization relative to other search activity but not the revenue amount or the resulting effect on website referrals.

Publishers, forums and retailers will continue to track referral visits and sales as AI answers and checkout tools develop. Regulatory investigations and publisher complaints in the UK, European Union and France may also clarify what obligations apply to Google’s AI search products. No outcome or timetable for those matters is provided in the source material.

Alphabet’s next financial updates can show whether Search revenue growth and spending trends change, but they may not answer the traffic question unless the company reports those measures directly. The current record is narrower: Search revenue grew, AI Mode queries were less monetizable, and the effect on outside websites remains contested and incompletely measured.

Key Questions

Did Google say AI Mode reduced Search revenue?

Google said fast growth in AI Mode queries affected Search revenue growth because those queries were less monetizable. It did not say Search revenue fell: Search & other revenue increased 12% to $63.35 billion in the third quarter.

How much revenue did AI Mode cost Google?

Google did not provide a dollar figure or quantify AI Mode’s contribution to the slowdown. Schindler also named exchange rates, retailer spending and media spending as factors.

Did Alphabet shares fall 15%?

The cited reporting says Alphabet’s Class A shares fell 12.6% on October 29. A 15% fall at the close is not confirmed by the source material.

Are AI answers reducing visits to websites?

Some cited data show fewer clicks or a lower share of publisher pageviews associated with Google Search, and Reddit’s CEO said AI Mode did not send traffic to Reddit. The available figures use different measures and do not establish a single, definitive causal effect across websites.

What information is still missing?

Google has not disclosed AI Mode’s revenue impact or provided an updated figure for clicks its AI features send to websites. Comparable traffic and advertising data over time would help clarify the effects on publishers and other businesses.

Source: ThorstenMeyerAI.com