TL;DR
Get the latest gadgets delivered free with Prime
- Fast, free delivery on millions of items
- Prime Video, Amazon Music and more included
- Member-only deals all year
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 projected a possible low-double-digit decline in daily users by the fourth quarter. Their stock prices fell sharply on the reported day, but the longer-term effects on their businesses and the wider web remain uncertain.
Google and Reddit faced separate setbacks tied to search on Thursday: Google said increased use of its AI Mode was weighing on search revenue growth because the feature earns less than traditional search, while Reddit reported meaningfully lower search traffic and warned that its daily users could fall by a low-double-digit percentage in the fourth quarter. Alphabet shares fell 12.6 percent and Reddit shares fell 15 percent, according to the Platformer report, as investors assessed the companies’ exposure to changing search habits.
Alphabet’s share decline erased about $500 billion in market value, Platformer reported, amid investor concerns about the scale of Google’s AI infrastructure spending. The company planned to spend up to $205 billion on capital expenses this year and had indicated spending would rise further in 2027. Alphabet also reported negative $9 billion in free cash flow, with the report describing the decline as accelerating from the previous quarter. These figures formed part of the financial backdrop to the selloff; they do not by themselves establish its full cause.
On an earnings call, Google Chief Business Officer Philipp Schindler said increased use of AI Mode was one reason search revenue growth had slowed despite an increase in queries. Search and related advertising remained a large business: revenue rose 12 percent to $63.35 billion, according to the source report, but growth had slowed from 19 percent in the first quarter and 17 percent in the second. Platformer said revenue was essentially flat against the preceding quarter.
Reddit said search traffic had fallen meaningfully and projected that daily users might decline by a low-double-digit percentage in the fourth quarter. CEO Steve Huffman said the company would increasingly require people to log in to access the site. He described the move as a way to improve advertising signals and engagement, protect Reddit’s data and adapt to regulations. Reddit’s own announcement ties the policy to both business goals and access to its content; the precise contribution of each factor was not stated.
AI Search Pressures Referral Revenue
The companies’ disclosures point to a shared challenge in the economics of the web: AI answers can keep users within a search product, while reducing the value of traditional links and referrals. Google’s disclosure matters because search advertising remains a major source of revenue, and its AI Mode appears to monetize less effectively than the familiar results experience, according to Schindler’s comments as reported by Platformer.
For Reddit, lower search traffic could mean fewer visitors arriving from Google and potentially less audience growth. Its planned login push may help the company gather more advertising signals and retain users, as Huffman said, but it also changes access to a site that has historically been browsable without an account. The two companies’ experiences do not prove that AI search alone caused Reddit’s traffic decline or Google’s slowing growth. They do show that both platform economics and publisher access are being tested as search changes.
Products Worth Considering
Samsung 27-Inch Odyssey QD-OLED G8 4K 240Hz Gaming Monitor
LG 34GX90SA-W 34-inch Ultragear WQHD OLED Curved Gaming Monitor
LG UltraGear 32GX850A-B 32-Inch 4K UHD Glossy OLED Gaming Monitor
As an affiliate, we earn on qualifying purchases.
From Search Links to AI Answers
Google’s traditional search model has connected people to outside websites while earning advertising revenue from search results. Over time, the company added direct answers and other features that let users get information without visiting another site. Its AI Overviews appear within search results, while AI Mode provides a separate conversational interface. The report said Google executives had previously argued that AI Overviews monetized about as well as traditional search; the new comments concerned AI Mode and its comparatively weaker monetization.
Reddit benefited from Google referrals as its discussions became more visible in search results. Platformer reported that Google paid Reddit $60 million a year to license its data after Reddit restricted bots’ access to its forums. That relationship illustrates why search changes matter beyond Google: websites can receive traffic from search while also licensing their content, but those revenue streams and benefits may shift as users seek answers directly through AI tools.
“Increased usage of Google’s AI Mode is hurting the company because it makes less money than traditional search.”
— Philipp Schindler, Google’s chief business officer, as reported by Platformer
Traffic Causes Remain Unsettled
The available report does not establish how much of Reddit’s traffic decline came from Google, as opposed to other changes in user behavior or referral sources. Its fourth-quarter daily-user outlook is a projection, not a reported result, and the source does not specify the exact comparison period behind the low-double-digit estimate.
It is also unclear whether Google’s AI Mode monetization will improve as the product develops, how quickly users will adopt it, or how much it contributed to the company’s overall revenue slowdown. The reported share-price drops reflect investor reaction on that day; they do not show whether the market’s concerns will persist. Google’s AI model milestone described in the source was an early sign of progress, not evidence of future financial performance.
Watch Earnings and Login Changes
The next useful indicators will be Google’s search revenue growth and AI Mode monetization disclosures, alongside further details about AI infrastructure spending and cash flow. For Reddit, investors and users will be watching whether the company implements broader login requirements, how those rules affect traffic and engagement, and whether the forecast daily-user decline materializes in the fourth quarter.
Those developments may clarify whether the companies’ Thursday disclosures mark temporary pressure or a more durable change in the relationship between search platforms, advertisers and websites. Until more results are reported, the scale and distribution of the effects remain open.
Key Questions
What do Google and Reddit have in common in this report?
Both disclosed pressure associated with search: Google said AI Mode earns less than traditional search, while Reddit reported lower search traffic and projected a possible fourth-quarter decline in daily users.Why did Alphabet shares fall?
Alphabet shares fell 12.6 percent on the reported day. Platformer cited investor concerns about large AI infrastructure spending and reported weaker free cash flow; the source does not attribute the entire decline to one factor.Is Reddit’s user decline confirmed?
No. Reddit reported meaningfully lower search traffic and said daily users might decline by a low-double-digit percentage in the fourth quarter. That figure is a forecast, not a confirmed outcome.Why does Reddit want more people to log in?
CEO Steve Huffman said logins can provide more advertising signals and higher engagement, while helping Reddit protect access to its data and adapt to regulations.Does this prove AI search is harming the whole web?
No. The disclosures suggest potential pressure on search monetization and referral traffic, but they do not establish that AI search alone caused Reddit’s traffic decline or quantify the effects across the web.Source: platformer.news
