Google Says AI Mode Earns Less. Reddit Says It Sends No Traffic. What AI Answers Are Doing To The Open Web

🔍 Read the full analysis: Google Says AI Mode Earns Less. Reddit Says It Sends No Traffic. What AI Answers Are Doing To The Open Web on ThorstenMeyerAI.com

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Google said Oct. 28 that rapid growth in its AI Mode search product weighed on monetization, acknowledging a revenue-growth trade-off as users turn to chat-style answers. The company gave no dollar estimate for the effect, and its Search and other revenue still rose 12% to $63.35 billion in the third quarter. Reddit CEO Steve Huffman separately said AI Mode does not send traffic to websites, sharpening concerns for publishers and other businesses that depend on search referrals.

On 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. Business chief Philipp Schindler listed exchange rates as the largest factor behind the slowdown relative to the prior quarter, followed by changes in some Asia-Pacific retail spending and a normalization in media spending after the football World Cup. He then said strong growth in AI Mode queries had an impact because Google was seeing lower monetization in AI Mode.

That statement confirms a direction, not the size of a loss: Schindler provided no revenue figure for AI Mode and did not say the product had made Search revenue fall. Alphabet reported that Search and other revenue increased 12% to $63.35 billion. The company’s quarterly filing did not mention AI Mode, and instead cited higher query volume, advertiser spending, and improvements to advertising formats and delivery as factors in Search growth.

Alphabet shares fell 12.6% on Oct. 29, their steepest one-day decline since 2004, according to the cited reporting. Accounts put the resulting market-value decline at roughly $475 billion to $500 billion; a 15% closing drop was not supported by the cited figures. The sell-off also followed concerns about cash generation: the source reports free cash flow of minus $9.1 billion and quarterly spending on data centers and chips of $51.4 billion. Those factors mean the share move cannot be attributed to AI Mode alone.

The Cost of Answer-First Search

AI answers can change the relationship between search engines and the sites they index. If a user gets enough information directly from an answer, the user may have less reason to click through to a publisher, forum, or retailer. That could affect referral traffic and advertising income even as Google handles more queries. The earnings call establishes that AI Mode currently earns less per query by Google’s account; it does not establish how large the gap is or how much it changes the economics of Search overall.

There are signs of pressure on referrals, but they do not answer every question about cause. The source cites Chartbeat data showing Google Search’s share of pageviews across its publisher network fell from about 9% in July 2024 to 5% in July 2026. Pew research cited in the source found users clicked a result in 8% of visits when an AI summary appeared, compared with 15% when it did not. These are different measures and study settings; neither figure alone establishes the effect of AI Mode specifically across all websites.

The commercial stakes extend beyond visits. Google says its checkout standard covers hundreds of thousands of brands, creating the possibility that a purchase could happen without a conventional visit to a retailer’s site. For businesses, the challenge is not only whether search sends fewer clicks, but whether they can still attract customers and measure sales when AI interfaces mediate discovery and transactions.

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What the Earnings Call Established

The distinction between slower growth and falling revenue matters. Schindler described AI Mode as one contributor to Search growth deceleration, alongside exchange rates and spending patterns. He did not say AI Mode was the biggest factor, and he said Google felt good about its trajectory. The reported quarterly result remained growth, not a decline in Search and other revenue.

Google has previously defended the role of its AI features in sending visitors to the web. In July, the company said its AI features send billions of clicks to websites every week. The Oct. 28 earnings call did not include a comparable current traffic figure. Google also says queries in AI Mode are three times longer than traditional searches and has discussed placing more ads within AI answers, although the source provides no estimate of the revenue those ads generate.

Other developments add to the debate over how AI search should work. The source reports that the UK is requiring Google to offer an AI opt-out, the European Union is investigating, and five French publisher groups filed a complaint on Oct. 29. Google also pays more than 400 publications through a licensing pilot. Those arrangements and regulatory actions show that the distribution of traffic, content, and revenue remains contested.

“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 Oct. 28 earnings call

Traffic and Revenue Still Unmeasured

Alphabet has not disclosed how much less revenue an AI Mode query generates than a traditional search, how many users choose AI Mode, or what share of queries it represents. The company also did not provide a new figure for clicks from its AI features during the earnings call. Without those numbers, readers cannot calculate AI Mode’s net impact on Search revenue or establish how many website visits it sends.

Huffman’s statement is a CEO’s assessment, not an independently verified measurement of traffic to every site. Publisher referral data and studies of clicks when AI summaries appear are relevant evidence, but they measure different things and do not establish that every decline was caused by AI answers. The relative roles of changing user habits, search changes, and other sources of traffic remain uncertain.

It is also unclear how much of the share-price decline reflected concerns about AI monetization rather than Alphabet’s cash flow, infrastructure spending, or other business issues. The reported market-value estimates differ, and none isolates the effect of AI Mode.

More Data on Ads and Referrals

The next useful evidence would be a comparable disclosure from Google on AI Mode usage, monetization, and outbound clicks. The company has said it plans to develop advertising within AI answers, but the source does not provide a launch timetable, revenue target, or measurement of how those ads perform. Future earnings calls and company disclosures may clarify whether increased query volume can offset lower revenue per AI Mode query.

Publishers, forums, and retailers will continue to track referrals and sales as AI search features develop. Regulatory scrutiny and publisher complaints may also affect the options available to content providers, including opt-outs and licensing arrangements. For now, the confirmed picture is limited: Google says AI Mode is less monetized, total Search revenue grew, and the scale of any traffic or revenue shift remains undisclosed.

Key Questions

Did Google say AI Mode caused Search revenue to fall?

No. Google said lower monetization in AI Mode weighed on Search growth. Search and other revenue rose 12% to $63.35 billion in the third quarter.

How much revenue does Google lose on AI Mode queries?

Google has not disclosed a dollar figure or the revenue difference between an AI Mode query and a traditional search. Schindler described lower monetization but did not quantify it.

Does AI Mode send traffic to websites?

Reddit CEO Steve Huffman said it does not, but his statement was an assessment, not a comprehensive traffic study. Google said in July that its AI features send billions of clicks to websites weekly; it gave no comparable figure on the Oct. 28 earnings call.

Why did Alphabet shares drop on Oct. 29?

Alphabet shares fell 12.6%, their steepest one-day decline since 2004, according to the cited reporting. The source also points to concerns about free cash flow and infrastructure spending; the available information does not isolate AI Mode as the cause.

Source: ThorstenMeyerAI.com