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11 hours ago
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Opinion Alphabet, Google's parent company, is making money hand over fist. In its latest quarterly report, Google's revenue grew 14 percent year-over-year to $96.4 billion. While Google's cloud revenue, $13.6 billion, with 31 percent year-over-year growth, is growing fast, the bulk of its cash, $54.2 billion worth, still comes from advertising.
What I wonder, though, is whether, even as its quarterly ad revenue hit a new all-time high, this can possibly continue?
You see, Google's move to place AI-generated summaries, aka "AI Overviews," at the top of search results is wreaking havoc on websites. How bad is it? Bad.
According to a new Pew Research Center study of 900 US Google users, when they saw an AI Overview, they were very unlikely to click on the links to other websites. Only a mere 1 percent of them clicked on the link to the page Google was summarizing.
But, wait, it gets worse! The 404 Media website reported that Google searchers did not arrive to an earlier story on the site about how Spotify is releasing AI-derived music from dead artists when they searched for it. It found the reason for this was that the AI Overview told readers about its contents without even linking to its story. Instead, what little link traffic there was went to AI-driven link aggregator sites. In short, "AI Overview just ensures people will never click the link where the information they are looking for originates."
The good news? Well, if you hate search engine optimization (SEO), you can kiss it goodbye. As a recent study of AI Overview and SEO showed, "AI Overview in the search results correlated with a 34.5 percent lower average clickthrough rate (CTR) for the top-ranking page."
If you're a website owner, you can forget about the importance of being for a subset of users on Google's first search page. Even if your link is in the coveted first spot on the user's first page, people are far less likely to click on it.
Google, for now, is still laughing its way to the bank. The search giant is putting advertisers' ads within or directly above and below AI Overviews themselves. As Google CEO Sundar Pichai said in an interview last year, "If you put content and links within AI Overviews, they get higher clickthrough rates than if you put it outside of AI Overviews." Organic links are pushed down.
Even in 2024, market research company SparkToro's study of searchers found "almost 30 percent of all clicks go to platforms Google owns." For every 1,000 Google searches in the United States, 360 clicks go to a non-Google-owned, non-Google-ad-paying property. With the rise of AI Overview, Google's share can only have grown, while everyone else's has shrunk.
Of course, Google reports that ad revenue per search has remained the same for AI Overviews as for traditional search result pages. In other words, website owners are losing money, but Google's doing just fine.
For now.
I see several major problems with Google's AI approach. First, thanks to the growing problem of AI model collapse, Google might find AI answers will increasingly be wrong. For example, the 404 Media story noted that the AI Overview answer was based on an AI-generated summary, which, in turn, was derived from another AI-generated summary. With every step away from the primary source, the odds increase that errors will be introduced.
In addition to this growing pyramid of AI-automated mediocracy, with all the money going to Google rather than publishers, there will be fewer and fewer high-quality sources. Without any guardrails to the quality of information taken in, you end up with xAI's Grok MechnaHitler episode.
Google isn't likely to end up that deeply entrenched in the right-wing mire, but this columnist predicts its answers' quality will decline. It's not just Google. Even my favorite AI chatbot, Perplexity, is giving me more and more results based on AI slop sites. Model decline is a universal AI problem.
- Guide for the perplexed – Google is no longer the best search engine
- Some signs of AI model collapse begin to reveal themselves
- Europe plots escape hatch from enshittification of search
- xAI's Grok lurches into right-wing insanity, offers tips on assaulting man
At the same time, ever so slowly, Google is starting to see competition from AI-powered search engines, such as Perplexity. Its rivals will quickly catch up, though. Mohammad Rasoolinejad, Bank of America's VP of Compliance Risk and Regulatory Reporting, believes that Google's enormous CapEx spending, $14 billion on servers in 91 days, isn't so much because of demand, but because "Google is forced to pour billions into infrastructure just to keep pace" and is experiencing "desperation to remain relevant in a market where no one commands loyalty, only efficiency."
Finally, let's not forget that the Department of Justice (DoJ) still sees Google as a monopoly and is demanding that Google divest itself of its Chrome web browser. Google's latest AI and ad moves are only going to put more fuel on that fire. Ironically, Google AI/advertising wins may hurt it the most in the months to come. ®
