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Google and Reddit both reported pressures tied to changes in search: Google said its AI Mode generates less revenue than traditional search, while Reddit said search traffic had fallen and warned daily users could decline. Their results point to a tension in the web’s changing bargain: AI-driven answers can keep people on search platforms, while sites that rely on search referrals may receive less traffic.
Google and Reddit both disclosed search-related pressures in earnings updates on Thursday: Google said people’s increased use of AI Mode was among the reasons search revenue growth slowed, while Reddit reported a meaningful drop in search traffic and warned daily users could fall by a low double-digit percentage in the fourth quarter. The developments show how AI answers and changing access to websites may reshape the flow of money and visitors across the web.
Alphabet shares fell 12.6 percent on the day, wiping out about $500 billion in market value, according to the source report. Investors were concerned about the scale of Google’s AI infrastructure spending: the company plans capital expenditure of up to $205 billion this year and has indicated it will spend more in 2027. Alphabet also reported negative $9 billion in free cash flow, with the decline accelerating from the previous quarter. Those figures describe the company’s financial results and plans; the report does not establish that AI Mode alone caused the share-price drop.
On an earnings call, Google chief business officer Philipp Schindler cited increased use of AI Mode as one reason search revenue growth was slowing even as query volume rose. The source report says search and related advertising revenue still grew 12 percent to $63.35 billion, but that was slower than the 19 percent growth in the first quarter and 17 percent in the second. The report does not provide a precise revenue figure for AI Mode or quantify its effect on overall search revenue.
Reddit separately reported that search traffic had fallen meaningfully and said daily users might decline by a low double-digit percentage in the fourth quarter. CEO Steve Huffman said the company would increasingly encourage visitors to log in. Reddit’s stated reasons include gaining more signals for ad targeting, increasing engagement and protecting access to its data. The report does not say that Reddit’s traffic decline was caused solely by Google or by AI search.
Search Revenue Meets Referral Risk
The two companies sit at different points in the same online economy. Google earns advertising revenue when people search, while publishers and platforms such as Reddit have benefited when search sends visitors to their pages. If people use AI answers without clicking through, Google may earn less from those sessions than from traditional search, while websites may lose traffic that supports advertising, subscriptions or user growth.
The immediate evidence is limited but relevant: Schindler identified AI Mode as one factor in slower search revenue growth, and Reddit reported declining search traffic. These statements do not establish a universal effect across the web, but they put pressure on the longstanding expectation that more search activity benefits both the search engine and the sites it indexes. Reddit’s planned login push also signals a possible response: sites may seek direct relationships with users rather than rely as heavily on open search referrals.
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How Search’s Web Bargain Changed
For years, Google indexed publishers’ pages and sent users to them, while earning money from ads shown alongside search results. The source report describes Reddit as a major beneficiary of that arrangement: Google began featuring forum discussions more prominently, and Reddit’s search traffic rose. After Reddit restricted bots’ access to its forums, Google reportedly agreed to pay $60 million a year to license Reddit data.
Google has also steadily added answers and other information directly to search results, reducing the need for some users to visit another site. Its AI Overviews appear within results, while AI Mode offers a separate conversational search experience. The source says Google executives had previously described Overviews as monetizing about as well as traditional search; the latest comments draw attention to a possible difference for AI Mode. Google’s search business remains large, with revenue growth still reported, though at a slower rate in the cited quarter.
“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
What the Earnings Do Not Show
The disclosures do not establish how much of Google’s slower search growth came from AI Mode, as opposed to other factors, or whether the new interface will become more profitable over time. The report also does not give a separate AI Mode revenue figure or a direct comparison of its advertising performance with traditional search beyond the statement attributed to Schindler.
For Reddit, the scale and duration of the search-traffic decline remain unclear, as does the extent to which it reflects Google changes, broader shifts in user behavior or other sources. The possible fourth-quarter daily-user decline is a forecast, not a reported outcome. It is also not yet clear how many visitors Reddit will require to log in or how the policy will affect traffic, engagement and advertising.
The Next Search and Traffic Tests
Investors and publishers will be watching future earnings for clearer evidence of how AI Mode affects Google’s search advertising growth and cash flow, particularly as the company carries out its planned AI infrastructure spending. Google has not, in the source material, provided a timeline for when AI Mode might match traditional search’s revenue performance.
Reddit’s next test is whether encouraging more visitors to create accounts can improve ad targeting and engagement without further reducing its audience. Its fourth-quarter daily-user figures will show whether the projected decline materializes. Until then, the two reports offer early signs of a changing search economy, not a complete measure of AI’s effect on the wider web.
Key Questions
What do Google and Reddit have in common in this report?
Both reported pressures connected to search. Google said greater use of AI Mode was one reason search revenue growth slowed, while Reddit said its search traffic had fallen meaningfully.
Did Google say AI Mode caused its stock decline?
No. The report links the share-price fall mainly to investor concern about Google’s planned AI infrastructure spending and cash flow. Schindler separately cited AI Mode’s lower monetization as one factor in slower search revenue growth.
How much did Reddit’s search traffic fall?
The source describes the decline as meaningful but gives no exact traffic figure. Reddit also warned that daily users might decline by a low double-digit percentage in the fourth quarter; that was a forecast, not a confirmed result.
Why is Reddit encouraging visitors to log in?
Huffman said logged-in users provide more signals for ad targeting and generally engage more. He also cited protecting access to Reddit’s data and adapting to regulations.
Source: platformer.news
