Google struggles to monetize AI like its search engine
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| Source: The Verge | Original article
Google’s search queries are rising at a five‑year high, yet its search revenue growth fell to 12% YoY in Q3, down from about 17% the prior quarter.
Google’s latest earnings reveal a paradox at the heart of its AI push. Alphabet reported that search queries are rising at the fastest pace in five years, yet the revenue generated by the core Search business slowed to a 12 percent year‑over‑year increase in the third quarter, down from roughly 17 percent the quarter before. The company attributes the query surge to AI‑enhanced features, but the boost has not translated into faster revenue growth.
The gap between usage and earnings is now spilling into Google’s relationships with content publishers. According to reporting from The Information, Google has been quietly expanding a “pay‑per‑value” licensing scheme that compensates a select group of roughly 100 digital publishers whose material powers AI answers in products such as AI Overviews, AI Mode and Gemini. Payments vary dramatically—from under $1,000 over several months to more than $1 million a year—and the calculation method remains opaque. Critics argue the program is more a legal façade than a meaningful revenue share, and several larger publishers are holding out for higher rates.
Why it matters is twofold. First, the mismatch between soaring AI‑driven search activity and stagnant revenue signals that Google’s monetisation model for its AI layers is still unproven. Second, the opaque licensing terms risk alienating the very publishers whose content fuels the AI, potentially inviting regulatory scrutiny and prompting competitors to offer more transparent deals.
What to watch next includes any adjustments Google makes to the licensing framework, further disclosures about how payments are calculated, and the impact of these moves on the upcoming earnings cycle. The broader AI ecosystem will also be attentive, especially after our earlier report that daily API calls now outpace Google searches, underscoring the scale of AI demand that still needs to be turned into profit.
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