Google says AI Mode contributed to weaker-than-expected search revenue at parent Alphabet. The AI search service monetises at a lower rate than traditional search.
Google parent Alphabet reported search revenue below expectations in its latest earnings results. The company identified the popularity of AI Mode, which generates less revenue than conventional search, as a contributing factor.
Search accounted for more than half of Alphabet’s 2025 revenue, making changes to its economics important to the wider business. Alphabet is also facing rising capital expenditure and reported negative free cash flow in the previous quarter.
For companies building AI products, the results illustrate why adoption and monetisation need separate tests. A popular AI service can put pressure on an established revenue stream before proving it can replace it.
Whether AI search can eventually match traditional search monetisation remains unproven.
Builders adding AI to established products need to measure whether new usage replaces more valuable existing activity.
Alphabet’s experience cautions against treating growing AI adoption alone as evidence of a sustainable business model.
Written automatically by the Made in 10 Newsroom from the source above.
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