What AI Answers Mean For The Open Web: Lower Earnings And Less Traffic

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Alphabet said Google AI Mode queries are growing but are earning less per query than traditional search, adding to concerns about whether AI answers will reduce visits to websites and the advertising or sales those visits support. The disclosure came on the company’s October 28 earnings call; Alphabet’s Search and other revenue nevertheless rose 12% to $63.35 billion in the third quarter.

Business chief Philipp Schindler named lower monetization of AI Mode as one of several factors behind slower search revenue growth. He also said foreign exchange was the largest factor in the slowdown relative to the previous quarter, followed by changes in retail and media spending. Schindler did not give a dollar estimate for AI Mode’s effect or say it had made Search revenue shrink. Alphabet’s quarterly filing, dated October 29, does not mention AI Mode, according to the source report.

Alphabet shares fell 12.6% on October 29, their steepest one-day decline since 2004, according to reports cited by ThorstenMeyerAI.com. Estimates of the market-value loss ranged from about $475 billion to $500 billion. The article says a widely shared claim of a 15% closing decline was not supported by the reported closing figures. Alphabet also reported free cash flow of minus $9.1 billion and quarterly capital spending of $51.4 billion, factors that added to investor concerns, the report said.

The potential effect on websites is harder to measure. Chartbeat data cited in the source showed Google Search’s share of pageviews across its publisher network falling from about 9% in July 2024 to 5% in July 2026. Pew Research Center measured clicks on a result in 8% of searches with an AI summary, compared with 15% when no summary appeared. These figures describe different measurements and do not, by themselves, establish that AI summaries caused the broader decline in publisher traffic.

The Cost of Answers Without Clicks

Search has long helped connect readers with publishers, forums and businesses. If users get enough information from an AI-generated answer, some may not visit the sites that supplied or published the material. That could reduce opportunities for those sites to earn through advertising, subscriptions or product sales. The source article’s publisher-network figures and Pew’s click study provide evidence of a traffic concern, but do not establish a single cause or quantify the overall financial effect.

For Google, the trade-off is also commercial. AI Mode may encourage more or longer queries, while producing less revenue per query than conventional results. Alphabet has said it is working to place more ads within AI answers, but the material provided does not quantify what those ads earn or whether they will make up for any reduction in clicks to external websites.

Retailers face a related possibility: customers may complete purchases through AI-assisted tools without visiting a merchant’s site. The source says Google’s checkout standard covers hundreds of thousands of brands. The extent to which this changes referral traffic, sales attribution or merchants’ control of customer relationships remains unclear.

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What Google Disclosed on October 28

During Alphabet’s earnings call, JPMorgan analyst Doug Anmuth asked why search queries were growing at their fastest pace in five years while search revenue growth had slowed. Schindler responded that exchange rates were the largest driver of the deceleration compared with the prior quarter. He also cited pressure on some Asia-Pacific retailers after the European Union ended a customs exemption for low-cost parcels, and normalized media spending following the football World Cup.

Schindler then said strong growth in AI Mode queries had affected results because of lower monetization in AI Mode, while adding that the company felt good about its direction. The source says Google has described AI Mode queries as three times longer than traditional queries and has pointed to rising search activity. In July, Google said its AI features sent “billions of clicks to websites every week”; the October earnings call did not provide an equivalent traffic figure.

Policy and licensing discussions are also underway. The source reports that UK rules require Google to offer an AI opt-out, the European Union is investigating, and five French publisher groups filed a complaint on October 29. It also says Google has licensing arrangements with more than 400 publications through a pilot. These developments reflect ongoing disputes over how AI search uses and directs attention to online content.

“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 October 28 earnings call

How Much Traffic AI Answers Displace

Alphabet has not disclosed how many clicks AI Mode sends to outside websites, how much less revenue it earns per query, or the total effect on search revenue. Its statement establishes a lower-monetization effect, but not its size. The available figures also do not show what share of changes in publisher traffic is attributable to AI answers rather than other shifts in audience behavior, search ranking or referral sources.

The cited traffic measures have limits: Chartbeat’s figures cover pageviews across its publisher network, while Pew’s study compares the likelihood of clicking on a result in searches with and without an AI summary. Neither gives a full accounting of revenue lost or gained across publishers, forums and retailers. It is also not yet clear how Google’s ads and checkout tools will affect referral patterns as they expand.

The Next Measures to Watch

Future Alphabet earnings reports may clarify whether AI Mode’s share of search activity and its monetization change over time, but the company has not announced a specific date for publishing a breakdown of AI Mode revenue or outbound clicks. Investors and publishers will also be watching whether Google provides comparable traffic figures to its July statement.

For publishers and retailers, the next useful evidence will be sustained, comparable data on search referrals, page visits and transactions, alongside details about licensing and AI-assisted checkout. Regulatory inquiries and complaints in Europe may add further information about how platforms use and direct users to online content. Until those figures and outcomes are available, the scale of AI answers’ effect on the open web remains unsettled.

Key Questions

Did Google say AI Mode reduced Search revenue?

No. Google said lower monetization of fast-growing AI Mode queries affected search revenue growth. Search and other revenue still grew 12% to $63.35 billion in the third quarter.

How much revenue did AI Mode cost Google?

Alphabet did not provide a dollar figure. Schindler named AI Mode as one factor in slower growth, alongside exchange rates and changes in retail and media spending.

Is there evidence that AI summaries reduce clicks to websites?

The source cites a Pew study in which users clicked a result in 8% of searches with an AI summary, compared with 15% without one. That comparison does not establish the total traffic or revenue effect across the web.

Why did Alphabet shares fall on October 29?

Alphabet shares fell 12.6%, their steepest one-day decline since 2004, according to the reports cited in the source. Concerns included cash flow and spending as well as slower search revenue growth; the move cannot be attributed to AI Mode alone.

Source: ThorstenMeyerAI.com