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Google and Reddit both reported pressure tied to changes in search: Google said users of AI Mode generate less revenue than traditional search users, while Reddit said search traffic had fallen meaningfully. Their results point to a tension in the web’s changing search economy, though the scale and longer-term effects remain uncertain.
Google and Reddit reported different pressures from changing search habits on the same day: Google said its AI Mode generates less revenue than traditional search, while Reddit said search traffic had fallen meaningfully. The disclosures put two parts of the online publishing and advertising economy on opposite sides of a shift toward AI-generated answers and changing access to web content.
On an earnings call, Google Chief Business Officer Philipp Schindler said increased use of AI Mode was among the reasons search revenue growth had slowed, even as the number of queries increased. The account does not provide a specific revenue figure for AI Mode or quantify how much it contributed to the slowdown. Google’s search and related advertising revenue still grew 12 percent to $63.35 billion, but growth was slower than the 19 percent reported in the first quarter and 17 percent in the second.
Reddit reported that traffic from search had fallen meaningfully and said daily users could decline by a low double-digit percentage by the fourth quarter. CEO Steve Huffman said in a shareholder letter that Reddit would increasingly encourage visitors to log in. He said accounts provide more signals for ad targeting, are associated with higher engagement, and help protect access to Reddit’s data. The company’s stock fell 15 percent after its earnings report, according to the source.
Alphabet shares fell 12.6 percent on the day, erasing about $500 billion in market value, as investors reacted largely to the scale of Google’s planned AI infrastructure spending. Alphabet planned up to $205 billion in capital expenses that year and had indicated spending would rise further in 2027. It also reported negative free cash flow of $9 billion. Those financial pressures were separate from, though reported alongside, the disclosure about AI Mode’s monetization.
AI Search Pressures Both Businesses
The disclosures illustrate a possible tension in Google’s shift from sending users to websites toward answering more queries within its own products. If AI search is used more but earns less per query than traditional search, the company may need to show that its newer experience can support its advertising business at scale. The figures provided do not establish whether that difference will persist or how it will change as the product develops.
For Reddit, falling search traffic threatens a route by which new users have found its discussions. Requiring more visitors to sign in could help the company gather advertising signals and manage access to its content, as Huffman argued, but it may also change how easily people can browse the site. More broadly, publishers and online communities have relied on search engines to deliver visitors; changes in search can affect that traffic even when people continue using AI-powered search tools.
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From Search Referrals to AI Answers
The earlier web-search model connected the two businesses: publishers made pages available for indexing, and Google sent users to them while earning advertising revenue from search. Reddit benefited when Google began featuring forum discussions more prominently. The source reports that Google later paid Reddit $60 million a year to license its data, after Reddit restricted bots from scraping its forums. That figure is attributed to the original report and is not independently detailed in the supplied material.
Google has since added AI Overviews, which appear above conventional results, and AI Mode, a separate conversational search experience. The source says Google executives had previously described AI Overviews as monetizing about as well as traditional search, while the new disclosure concerned AI Mode. Google has argued that AI answers can prompt deeper searches and higher-quality clicks to websites; the reported earnings comments indicate that AI Mode currently earns less than traditional search, but do not by themselves settle the broader question of how AI search affects the web.
“It is better for our business because we will have more signals for ads targeting, and being logged-in leads to higher engagement generally.”
— Steve Huffman, Reddit CEO, in a shareholder letter
The Size of the Search Shift
The source does not quantify how much AI Mode use is reducing Google’s revenue, identify which search categories are most affected, or say whether the revenue gap will narrow. It also does not establish how much of Reddit’s reported traffic decline came from Google, other search services, or broader changes in usage. The projected low double-digit decline in Reddit daily users is a forecast for the fourth quarter, not a confirmed outcome.
It remains unclear how Reddit’s login push will affect visitor numbers, engagement, and advertising revenue. Nor do the reported stock declines establish the long-term financial impact of either company’s search changes. The source’s interpretation that Google may ultimately benefit while publishers continue to struggle is analysis, not a confirmed forecast.
Companies Face Tests of Their Models
Google will need to show in subsequent results whether AI Mode use can grow while supporting revenue, and how its infrastructure spending affects cash flow. Investors will also watch whether search advertising growth changes as AI features become a larger part of the product. No specific milestone or timetable for AI Mode monetization was provided in the source.
Reddit’s next test is whether prompting more visitors to log in can improve advertising signals and engagement without worsening the traffic decline it reported. Its fourth-quarter daily-user outlook will offer a measure of how the shift is playing out. The broader effect on publishers will depend on whether search and AI products continue to send readers to outside sites or keep more interactions within their own interfaces.
Key Questions
What do Google and Reddit’s reported difficulties have in common?
Both involve changes in how people reach information online. Google said AI Mode earns less than traditional search, while Reddit reported falling search traffic and plans to encourage more visitors to log in.
Did Google’s search business report a revenue decline?
No. Search and related advertising revenue grew 12 percent to $63.35 billion, according to the source. The growth rate was slower than in the first and second quarters, and Google’s business chief said AI Mode was among the reasons for the slowdown.
Why does Reddit want more users to log in?
CEO Steve Huffman said logged-in users provide more signals for ad targeting and generally show higher engagement. He also said login requirements would help Reddit protect access to its data and respond to regulations.
Is Reddit’s forecasted user decline confirmed?
No. Reddit said daily users might decline by a low double-digit percentage by the fourth quarter. That is a forecast, and the source does not provide a confirmed result or a full breakdown of the causes.
Source: platformer.news
