Why AI Mode May Earn Less While Publishers See Less Traffic

🔍 Read the full analysis: Why AI Mode May Earn Less While Publishers See Less Traffic on ThorstenMeyerAI.com

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Alphabet business chief Philipp Schindler said on Oct. 28 that rapid growth in Google’s AI Mode queries had weighed on Search monetization because the queries were earning less than other searches. The company did not disclose the size of that effect, and its Search and other revenue rose 12% to $63.35 billion in the third quarter, so the comment does not mean AI Mode caused Search revenue to fall.

Schindler made the remarks during Alphabet’s earnings call, responding to a question about search-query growth accelerating while Search revenue growth slowed. He named three contributing factors: foreign-exchange movements, changes in retail and media spending, and lower monetization of fast-growing AI Mode queries. He described currency as the single largest factor in the Search slowdown relative to the previous quarter. He did not assign a dollar amount or percentage to AI Mode’s contribution.

The source report says Google has described overall query growth as its fastest in five years and AI Mode queries as three times longer than conventional searches. Longer queries may create different opportunities to show ads, but the earnings-call remarks alone do not establish how many ads appear, how much advertisers pay, or how much revenue the product generates per query. Google’s stated response is to develop advertising within AI answers.

The market reaction came amid broader financial concerns. Alphabet Class A shares fell 12.6% on Oct. 29, according to figures cited by ThorstenMeyerAI.com, which described the decline as the worst since the company listed in 2004. Reports put the market-value loss at roughly $475 billion to $500 billion. Alphabet also reported free cash flow of minus $9.1 billion, while capital spending reached $51.4 billion for the quarter. Those figures offer additional context for the sell-off; they do not show that AI Mode alone caused it.

The Cost of Answering Without a Click

The issue for Google is whether conversational answers can attract more searches while earning less on each one. If AI Mode use grows faster than the ad revenue it generates, it could put pressure on Search’s average monetization even as total Search revenue increases. Google has identified that tension, but has not published a per-query comparison or a standalone revenue figure for AI Mode.

For publishers, the concern is a different part of the same exchange: users may get enough information from a search results page to leave without visiting the sites that produced it. ThorstenMeyerAI.com cites Chartbeat data showing Google Search’s share of pageviews across its publisher network falling from about 9% in July 2024 to 5% in July 2026. It also cites a Pew study in which users clicked a result in 8% of visits when an AI summary appeared, compared with 15% when it did not. These are reported observations, not proof that AI summaries alone caused the broader traffic change.

That matters to businesses whose advertising, subscriptions or sales depend on visitors arriving from search. Forums and news sites can lose opportunities to build a direct relationship with readers; retailers may face a separate change if AI tools allow shoppers to complete purchases without visiting a store’s website. The available figures do not establish the overall financial effect on any one sector.

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What the Earnings Call Actually Said

The comments came during a discussion of a slowdown in Search revenue growth, not a reported decline in Search revenue. Schindler’s answer placed AI Mode alongside currency and advertiser-spending changes. The distinction matters: saying a growing product earns less per query than other searches does not establish that it reduces total revenue, nor does it quantify how much growth would have occurred without it.

The source report says Alphabet’s Oct. 29 quarterly filing did not mention AI Mode. It attributed search growth to factors including more queries, advertiser spending, and improvements to ad formats and delivery. In July, Google said its AI features sent “billions of clicks to websites every week,” according to the report; it did not provide a comparable click figure during the October earnings call. Reddit chief executive Steve Huffman separately said AI Mode did not drive traffic to Reddit, adding that he did not know of it driving traffic to others. That is his assessment, not a complete measurement of referral traffic across the web.

Google’s search changes are also drawing regulatory and commercial responses. According to ThorstenMeyerAI.com, UK rules require Google to offer an AI opt-out, the European Union is investigating, and five French publisher groups filed a complaint on Oct. 29. The report also says Google’s checkout standard covers “hundreds of thousands of brands” and that the company pays more than 400 publications through a licensing pilot. These developments show that the debate involves access, attribution and commerce as well as ad revenue.

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

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

The Missing Revenue and Referral Figures

Google has not disclosed how much less revenue an AI Mode query earns, how large AI Mode’s effect was on the quarter’s Search growth rate, or how its monetization compares with conventional search on a like-for-like basis. The company also did not provide a current figure for clicks sent from AI features to websites on the earnings call. Without those measurements, it is not possible to calculate whether publishers’ reported traffic declines were caused by AI answers, other search changes, or a combination of factors.

The market reaction also cannot be attributed to the AI Mode comment alone. The source report cites weaker-than-expected free cash flow and high capital spending as other investor concerns. It reports a 12.6% closing decline, not the 15% figure used in a circulating headline. Estimates of lost market value vary by outlet, and rounded figures should not be treated as a precise measure of the effect of any single announcement.

Google’s claim that its AI features send billions of clicks each week and the publisher-network and Pew findings measure different things and use different methods. They do not settle whether AI search is sending more or fewer visits overall. Further data on referral volumes, advertising revenue and user behavior would be needed to assess the net effect.

More Data on Ads and Clicks

The next evidence to watch is whether Alphabet provides more detail about AI Mode advertising and referral traffic in later earnings updates. Changes in query growth, Search revenue growth and ad formats may show whether the company can monetize its AI answers more effectively, but those figures may still not isolate AI Mode’s contribution.

Publisher groups and regulators are also pursuing questions about traffic, opt-outs, licensing and the use of published material. The European Union investigation and the complaint filed by French publisher groups are among the developments identified in the source report; their outcomes and timing are not specified. For now, Google’s confirmed statement is limited: AI Mode queries were growing quickly and were less well monetized, while Search revenue continued to grow.

Key Questions

Did Google say AI Mode reduced Search revenue?

No. Google said fast growth in AI Mode queries had an effect because they were less well monetized. Search and other revenue still grew 12% to $63.35 billion in the third quarter.

How much revenue does Google lose from AI Mode?

Google did not provide a dollar figure or quantify AI Mode’s effect on Search revenue growth. The earnings-call comment establishes a monetization difference, not its size.

Is AI Mode reducing traffic to publishers?

The source report cites a decline in Google Search’s share of pageviews across Chartbeat’s publisher network and lower click rates when AI summaries appeared in Pew research. Those findings indicate a traffic concern, but do not establish that AI Mode alone caused the changes.

What else contributed to Alphabet’s share-price decline?

The source report identifies weak free cash flow and high capital spending as additional investor concerns. Alphabet Class A shares fell 12.6% on Oct. 29; the reported figures do not show that AI Mode was the sole cause.

Source: ThorstenMeyerAI.com