Alphabet says Google search queries are growing at their fastest rate in five years, yet The Verge reports search revenue growth slowed to 12 per cent. More searching is not translating directly into more advertising income, and AI may be part of why.
Key takeaways
- Alphabet says Google search queries are growing at their fastest rate in five years, according to The Verge.
- The Verge reports that Google’s search revenue grew 12 per cent year over year in the third quarter, down from roughly 17 per cent in the previous quarter.
- Slower revenue growth is not the same as falling revenue, because Google’s search business still expanded over the year.
- Search advertising earns money mainly when people click on ads, so a rise in queries does not guarantee a matching rise in income.
- One quarter of figures cannot establish whether AI summaries are the cause of slower growth or whether the slowdown will last.
What is happening with Google search?
Two measures of Google’s search business are moving in different directions. The Verge reports that Alphabet, Google’s parent company, described search queries as growing at their fastest rate in five years. Over the same period, search revenue growth slowed to 12 per cent year over year in the third quarter, from roughly 17 per cent in the quarter before.
That is a drop of about five percentage points in the growth rate. It does not mean Google earned less from search than it did a year earlier. The business still grew, but it grew more slowly than it had recently.
The Verge also points to paid clicks, meaning clicks on advertisements, as part of the picture. The summary available for this article cuts off before giving that figure, so the size of any change in paid clicks is not stated here.
The contrast matters because search has long been treated as a simple equation: more people asking more questions means more chances to show ads. The latest figures suggest that the relationship is looser than that, at least for now. Why that is happening is not settled by the numbers alone.
Why is this in the news now?
The immediate reason is Alphabet’s quarterly earnings report, which The Verge has examined alongside the rise of AI in search. Earnings reports are among the few regular moments when a large company publishes comparable figures about its business, and analysts and journalists read them closely for changes in direction.
This set of figures drew attention because it touches a question hanging over the technology industry: whether AI products can make money on the scale of the businesses they might change or replace. Google is an especially useful case because it operates both sides of that shift. It runs one of the most profitable advertising products ever built, and it has placed AI features directly inside that product.
The Verge’s framing is that Google has not yet worked out how to make AI pay as search has. That is an interpretation of the numbers, and a reasonable one to test, but the report does not amount to proof that AI is reducing Google’s income. It shows a pattern that needs explaining, in a quarter when usage looks strong and revenue growth looks weaker.
How does search advertising make money?
For a newcomer, the basic model is straightforward. A person types a query, and Google shows results alongside advertisements. Advertisers bid to appear for particular searches, and they typically pay when someone clicks on their ad. Search revenue therefore depends broadly on two things: how many ads get clicked, and how much each click costs.
This explains why query growth alone can mislead. Not every search carries the same commercial value. A question about history may attract few advertisers, while a search for car insurance may attract many. If most new queries are informational rather than commercial, usage can rise strongly with little effect on revenue.
AI Overviews add another layer. These are AI-generated summaries that appear on the results page and try to answer a question directly. The feature changes what a person sees first, and it may change whether they feel any need to click further. Ads can be shown around these summaries, but the format differs from the traditional list of links.
Generating AI answers also requires heavy computing, which is a separate cost question. Revenue figures alone do not show how profitable each AI-assisted query is.
Who is affected, and how?
Google and Alphabet are the most directly affected. Search is central to the company’s income, so even a modest change in its growth rate attracts scrutiny from investors, who are weighing large spending on AI against the returns it may bring.
Advertisers are also affected. Businesses that rely on search ads depend on clicks to reach customers. If people increasingly get answers without leaving the results page, advertisers may need to reconsider where their money goes and how they measure whether it worked. How individual advertisers are responding is not known from these figures.
Publishers and other websites have a related interest. Many depend on visitors arriving from search results, and summaries that answer a question on the page could reduce the reason to visit. The reported figures cover Google’s revenue rather than traffic to other sites, so they do not measure this effect.
Ordinary users feel the change differently. They may get faster answers, but they also rely more on a machine-written summary, which can contain errors. Rivals offering AI tools are watching as well, since the economics of Google’s model will shape expectations for theirs.
Where do informed observers disagree?
The central disagreement is over how to read the gap between usage and revenue. One view holds that it is an early warning. On this reading, AI answers satisfy people on the page, fewer ads get clicked, and the most lucrative part of the internet economy starts to weaken.
A second view treats it as a transition. New formats often take time to earn money, and advertising products are usually refined after audiences arrive rather than before. If people are searching more, the argument runs, Google has the attention it needs and can build the commercial side later.
A third view is more cautious about drawing any link at all. A single quarter’s slowdown can reflect many things, including advertisers’ budgets, wider economic conditions, pricing changes and the strength of the same quarter a year earlier. The available material does not separate these factors, so any confident attribution to AI goes beyond the evidence.
There is also debate about what a successful AI business should look like. Some expect it to resemble advertising, while others expect subscriptions or business contracts to matter more. These positions rest on forecasts, and the current figures do not settle them.
What does this mean in practice?
For anyone following the technology industry, the main lesson is to look past headline usage numbers. Growth in queries, users or engagement says little about income until it is set beside the figures that show what that activity earns.
For businesses that buy search ads, the practical step is to measure results rather than assume past patterns will hold. Clicks, conversions and costs can shift as results pages change, and a campaign that worked under the older layout may behave differently now.
For publishers and website owners, the figures are a reason to avoid relying on any single source of visitors, though they do not show how much traffic any given site has lost or may lose.
For investors, the figures raise a question about timing rather than delivering a verdict. A company can spend heavily on AI for a long time before the returns are clear, and quarterly results give only partial evidence.
For everyday users, little changes immediately. Search still works and remains free to use. It is reasonable to check important AI-generated answers against their original sources, especially on matters of health, money or law.
What should readers watch next?
The most useful signal will be Alphabet’s next quarterly results. A single slower quarter is a data point, and it would take several in a row to establish a trend. If revenue growth picks up again while queries stay strong, the current gap may look temporary.
Paid clicks deserve particular attention, since they show whether people are still engaging with ads. Prices paid per click matter too, because higher prices can mask weaker click growth, and the reverse is also possible.
Changes to the product itself are another indicator. Watch how Google places ads within AI features, whether those ads are clearly labelled, and how users and advertisers respond.
Finally, watch the wider field. Regulators, publishers and competing AI companies all have a stake in how search changes. Whether AI can match the earning power of the traditional results page remains unknown, and the evidence so far is limited.
Frequently asked questions
Is Google’s search revenue falling?
No. The Verge reports that Google’s search revenue grew 12 per cent year over year in the third quarter. What fell was the rate of growth, which had been roughly 17 per cent in the previous quarter. The business is still expanding, though more slowly than it was, and the figures do not show a decline in the money it earns from search.
Why doesn’t more searching mean more revenue for Google?
Google earns search income largely when people click on ads, and how much it earns depends on the number of clicks and the price of each. Many searches have little commercial value, and some may be answered directly on the results page. Query numbers can therefore rise strongly without producing a matching increase in advertising revenue for the company.
What are Google AI Overviews?
AI Overviews are summaries generated by artificial intelligence that appear on Google’s results page and try to answer a question directly. They sit alongside the more familiar links and advertisements. Because they can give someone an answer without a further click, they have prompted questions about how they might affect advertising income and the traffic sent to other websites.
Are AI Overviews the reason Google’s revenue growth slowed?
That has not been established. The Verge’s report places slower revenue growth beside strong query growth and AI’s expanding role in search, which makes AI a plausible factor. However, a single quarter’s slowdown can also reflect advertiser budgets, pricing, economic conditions or comparisons with the previous year. The available figures do not separate these possible causes from one another.
What is a paid click?
A paid click is a click on an advertisement, usually one for which the advertiser pays. It is a common way of measuring how much people engage with search ads. Paid click figures are useful because they show activity directly linked to advertising income, whereas total search queries also include many searches that carry no ads or lead to no ad clicks.
Does slower search growth affect ordinary Google users?
Not immediately. Google Search remains free, and the reported figures concern the company’s income rather than the service available to users. Over time, though, pressure to earn more from AI features could influence how results pages look and where ads appear. Users may wish to check important AI-generated answers against original sources, because such summaries can contain errors.
Sources and further reading
- The Verge: reporting on Alphabet’s third-quarter results, and the source of the figures used in this article.
- Alphabet investor relations: the primary place to check quarterly earnings figures, suggested as further reading and not independently checked for this article.
- Google Ads documentation: further reading on how search advertising and click-based pricing work.
- Google Search product documentation: further reading on how AI Overviews are presented to users.
Surfaced from the rss:verge signal “AI search advertising revenue”. AI-assisted draft, editorially reviewed.
