GOOGLE'S AI EATS ITS OWN ADS

The real news

The story, straight

Google search feels free because businesses pay to put ads beside results. That advertising helps pay for the service.

Google's AI Mode instead answers questions conversationally, changing how people use search.

Now the helpful assistant is nibbling the business that feeds it. Alphabet's chief business officer, Philipp Schindler, said AI Mode was eating into traditional search advertising revenue, the BBC reports.

Imagine installing a vacuum to clean your shop and watching it lovingly empty the till. Excellent suction.

Difficult staff appraisal.

The BBC reports that Google-owner Alphabet lost just over $500 billion in stock market value on 29 October. That means investors priced its shares lower.

It does not mean $500 billion disappeared from Google's bank account.

AI Mode was not the whole story. Quarterly revenue grew 25% to $127.6 billion, but missed analysts' expectations, particularly in advertising.

Investors were also weighing enormous spending on artificial intelligence.

Revenue rising while investors panic isn't a contradiction: buying shares means betting on future earnings, not applauding yesterday's sales.

The useful upside: conversational answers could make finding information easier. But useful technology still needs a way to pay its bills.

Google is discovering that answering the question and funding the answer are different jobs.

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