TL;DR
Get the latest gadgets delivered free with Prime
- Fast, free delivery on millions of items
- Prime Video, Amazon Music and more included
- Member-only deals all year
Google said greater use of AI Mode is weighing on search monetization because it earns less than traditional search, while Reddit reported a meaningful drop in search traffic and warned daily users could fall. The developments point to pressure on the traditional exchange in which Google sends visitors to websites and earns advertising revenue from search.
Google and Reddit reported separate signs of strain in the web’s search-driven traffic economy on the same day: Google said increased use of its AI Mode was contributing to slower search revenue growth, while Reddit said traffic from search had fallen meaningfully. The disclosures matter because they point to pressure on a long-standing arrangement in which Google monetizes searches and websites benefit from visitors it sends.
On an Alphabet earnings call, Chief Business Officer Philipp Schindler told an analyst that increased use of Google’s AI Mode was among the reasons search revenue growth was slowing despite an increase in queries. He said AI Mode generates less revenue than traditional search. Alphabet’s search and related advertising revenue still grew 12 percent to $63.35 billion, but growth had been 19 percent in the first quarter and 17 percent in the second, according to the source report.
Reddit reported that its search traffic had fallen meaningfully and said daily users could decline by a low double-digit percentage by the fourth quarter. CEO Steve Huffman said the company would increasingly require people to log in to use the site. He cited advertising signals, engagement, protection of Reddit’s data and adaptation to regulations as reasons for the change.
The two companies’ financial updates came amid sharp share-price declines. Alphabet fell 12.6 percent, erasing about $500 billion in market value, as investors worried about the scale of its AI infrastructure spending, the report said. Reddit shares fell 15 percent after its earnings report. These figures describe that day’s trading; they do not establish a longer-term trend in either company’s stock.
AI Search Pressures the Traffic Exchange
The shared concern is not simply that search activity is changing. Google’s disclosure suggests that some users’ growing reliance on its AI interface may produce less advertising revenue per use than traditional search. Reddit’s update shows a separate consequence for a site that has benefited from search referrals: fewer visitors arriving from search could affect its audience and business.
For publishers and other sites, the traditional arrangement brought users to their pages, where they could build audiences and earn revenue. If search increasingly answers questions itself, or if fewer people reach sites through search results, that source of traffic may weaken. Reddit’s planned push toward account logins also signals that platforms may seek more direct relationships with visitors and greater control over their content and data.
The disclosures do not prove that AI features alone caused either company’s results. They do, however, provide concrete evidence that companies are confronting different costs of the same shift: Google is investing heavily in AI while reporting lower monetization from AI Mode, and Reddit is responding to reduced search traffic.
Products Worth Considering
LG UltraGear 27-Inch QHD OLED Gaming Monitor, 240Hz, 0.03ms, G-SYNC Compatible, FreeSync Premium Pro, HDMI 2.1
Samsung 27-Inch Odyssey QD-OLED G8 4K 240Hz Gaming Monitor
LG 34GX90SA-W 34-inch Ultragear WQHD OLED Curved Gaming Monitor
As an affiliate, we earn on qualifying purchases.
From Search Referrals to AI Answers
For years, Google search functioned as a gateway to other websites: it indexed pages, displayed results and sent users onward, while earning revenue from ads. The source report describes Reddit as a beneficiary of this model. Search engines began surfacing forum discussions more prominently as users sought human-written conversations, bringing Reddit additional visitors.
The relationship also includes commercial licensing. The report says Google reportedly agreed to pay Reddit $60 million a year to license its data after Reddit restricted bots’ access to its forums. Separately, Google has developed search features that provide more information directly on its own pages. AI Overviews appear above conventional results; AI Mode offers a separate, more conversational search interface.
The source report notes that Google previously said AI Overviews monetized about as well as traditional search. Schindler’s comments specifically concern AI Mode, so they should not be treated as a direct update on the performance of every Google AI search feature. The distinction matters when evaluating what the earnings-call disclosure confirms.
“Increased usage of Google’s AI Mode is hurting the company because it makes less money than traditional search.”
— Philipp Schindler, Google chief business officer, as reported by Platformer
How Lasting the Search Decline Is
The disclosures do not establish how much of Reddit’s traffic decline came from changes to Google search, rather than other factors, or how the decline will develop. Reddit’s warning that daily users could fall by a low double-digit percentage by the fourth quarter is a forward-looking expectation, not a confirmed outcome.
Google’s comments identify AI Mode as one factor in slower search revenue growth, but the source does not quantify its contribution or detail how its economics may change. Nor do the reported earnings establish whether AI Mode’s lower monetization is temporary, a trade-off for future growth, or a lasting feature of the product. The source report also does not provide a specified date for the Thursday developments.
User Growth and AI Revenue
The next evidence will come from later earnings updates: whether Google can raise AI Mode revenue per use while funding its planned infrastructure spending, and whether Reddit’s search traffic and daily user counts continue to weaken. Reddit’s stated move toward login-based access will also show whether more direct user relationships can support its advertising and data strategy.
For now, the companies have described different sides of a changing search ecosystem, not a settled outcome. Google remains a large search advertising business, while Reddit has announced a response to its traffic concerns. Further disclosures will be needed to measure the scale and duration of the effects on both companies and the wider web.
Key Questions
What do Google and Reddit have in common in these reports?
Both reported pressure tied to how people use search. Google said AI Mode earns less than traditional search, while Reddit said search traffic to its site had fallen meaningfully.
Did Google say AI Mode caused all of its slower search growth?
No. Philipp Schindler identified increased AI Mode use as one of the reasons for slower search revenue growth. The source does not quantify its contribution or say it was the sole cause.
What change is Reddit planning?
CEO Steve Huffman said Reddit would increasingly push visitors to log in to use the site. He cited ad-targeting signals, engagement, data protection and regulatory adaptation.
Are Reddit’s projected user declines confirmed?
No. Reddit said daily users might decline by a low double-digit percentage by the fourth quarter. That is a projection; the source does not confirm that it occurred.
Source: platformer.news
