Google’s AI Overviews Turned One: Is It Already Game Over for AI Search Competitors? | Behind the Numbers

Summary

Podcast Summary: "Google’s AI Overviews Turned One: Is It Already Game Over for AI Search Competitors?" | Behind the Numbers

Introduction

In this episode of EMARKETER's "Behind the Numbers," host Marcus engages in a lively discussion with EMARKETER analysts Yuri Wormser and Jeremy Goldman. They delve into the evolving landscape of digital search, focusing on Google's recent advancements in artificial intelligence (AI) and the implications for its competitors. Released on August 8, 2025, this episode provides a comprehensive analysis of whether Google's AI strategies have solidified its dominance in the search engine market or if emerging AI platforms pose a significant threat.

Google’s AI Overviews: Strengthening Search Dominance

The primary focus of the discussion revolves around Google's AI Overview tool, which integrates the Gemini AI model to enhance traditional search results. This feature allows users to receive AI-generated answers directly on the search page, potentially reducing the need to click through to external links.

• Yuri Wormser highlights the impact of this rollout: “Google has reported that over 2 billion people are now using AI overviews monthly, up from 1.5 billion in Q1. It’s a really impressive rollout and they’re monetizing it. So, so far, so good for Google” ([03:40]).

Jeremy Goldman adds that Google's extensive data and ability to run large-scale experiments give it a significant advantage over newer AI competitors like ChatGPT and Perplexity. “Google can run so many different experiments at scale simultaneously to see what works and what doesn’t in terms of monetizing AI search” ([04:19]).

Competitor Landscape: AI Search Platforms

The conversation shifts to the emergence of AI-driven search competitors such as ChatGPT, Perplexity, and Claude. These platforms were initially perceived as threats poised to challenge Google's dominance. However, Google's proactive integration of AI appears to be countering these challenges effectively.

• Yuri Wormser acknowledges the ongoing battle: “The game’s not over until that plays out. But so far, Google has managed to keep ahead” ([03:40]).

Jeremy emphasizes the scale at which Google operates compared to its competitors: “They're starting off from very small bases in relation to what Google has to work with” ([04:19]).

Advertising Model: Navigating Revenue Streams

A critical topic discussed is the impact of AI overviews on Google’s advertising revenue. While AI summaries increase the number of search impressions, they may reduce the number of clicks on traditional, revenue-generating ads.

• Marcus references David Strifeld of the New York Times, who points out that although Google’s ad revenue grew by 10% in Q2, there are concerns about the sustainability of this growth due to AI overviews: “Grow in ad revenue is up, but traffic from AI overviews might dilute the click-through rates” ([05:04]).

Future Outlook: Balancing Innovation and Competition

The analysts explore whether Google's current strategies will sustain its market dominance in the long term. While Google's AI integrations have so far been successful, the rapid innovation from competitors could still pose significant challenges.

• Yuri Wormser muses on the future: “Consumer behavior is sticky... that gives Google a big advantage at this moment and controlling the interface” ([05:34]).

Jeremy Goldman discusses the evolving definition of search, suggesting that multiple platforms might coexist: “The definition of search is changing... no reason to not continue to expect this bifurcation of what search is” ([08:31]).

Google’s Financials: Q2 Earnings Analysis

A significant portion of the discussion centers on Google's Q2 earnings, highlighting the company’s substantial investment in AI and its implications for profitability.

• Jeremy Goldman notes, “Google made over $70 billion in ad revenue in the quarter. It pocketed $28 billion in net income, which is pretty impressive... but investors were still underwhelmed” ([17:44]).

Yuri Wormser concurs, stating that Google’s aggressive investment in AI is a double-edged sword: “Sundar Pichai is being pretty bold with his expenditure. So $85 billion, I think, is actually a good sign for Google” ([20:25]).

Antitrust Concerns: Regulatory Challenges

The episode also touches upon Google's ongoing antitrust battles, which could hinder its ability to maintain its dominant position.

• Yuri Wormser identifies antitrust as a major vulnerability: “All of these moves that they've done in the past have raised the eyebrows of antitrust regulators... the latitude that they used to have on some of these big bets might be a little less than it was” ([15:23]).

Jeremy Goldman elaborates on the increasing scrutiny Google faces: “Regulators are thinking much more proactively about this type of stuff... So now I think regulators are viewing Google’s moves with much more skepticism” ([16:02]).

Conclusion: An Epic Battle Ahead

The episode wraps up with the consensus that while Google currently holds a strong position in the AI-driven search market, the competition is far from over. The combination of Google's vast resources, strategic AI integrations, and robust advertising model positions it well against emerging AI search platforms. However, antitrust challenges and the relentless pace of AI innovation mean that the search engine landscape will continue to evolve, setting the stage for an ongoing "epic battle" in the digital search arena.

• Yuri Wormser concludes: “We're just at the start of a pretty epic battle” ([08:30]).

Notable Quotes

• Yuri Wormser ([03:40]): “Google has reported that over 2 billion people are now using AI overviews monthly, up from 1.5 billion in Q1. It’s a really impressive rollout and they’re monetizing it. So, so far, so good for Google.”

• Jeremy Goldman ([04:19]): “Google can run so many different experiments at scale simultaneously to see what works and what doesn’t in terms of monetizing AI search.”

• Yuri Wormser ([05:34]): “Consumer behavior is sticky... that gives Google a big advantage at this moment and controlling the interface.”

• Jeremy Goldman ([08:31]): “The definition of search is changing... no reason to not continue to expect this bifurcation of what search is.”

• Yuri Wormser ([15:23]): “All of these moves that they've done in the past have raised the eyebrows of antitrust regulators... the latitude that they used to have on some of these big bets might be a little less than it was.”

Final Thoughts

This episode of "Behind the Numbers" offers an in-depth look at Google's strategic maneuvers in the AI domain and the broader implications for the search engine market. By combining expert analysis with actionable insights, Marcus, Yuri, and Jeremy provide listeners with a nuanced understanding of where the digital search landscape is headed and what it means for marketers, advertisers, and consumers alike.

Transcript

[Marcus]

Got an E Commerce challenge. AWIN has you covered. With AWIN's affiliate platform, brands of all sizes can unlock endless marketing opportunities, reach consumers everywhere, and choose partners that fit their goals. Sounds good to me. Control costs, customize programs and drive real results. Learn [e-mail] eMarketer hey gang. It's Friday, August 8th. Yuri, Jeremy and listeners, welcome to behind the Numbers Disney Market video podcast made possible by awin. I'm Marcus and today we have two folks joining me. We have our principal analyst who heads up our digital, advertising, media and tech teams. Living in New Jersey, it's Yuri Wormser.

[Yuri Wormser]

Hey Marcus, how are you?

[Marcus]

Hey fellow. Very good. How you doing?

[Yuri Wormser]

Doing great, very nice.

[Marcus]

We're also joined by the Senior Director of briefings. Living across the Hudson river from URI in New York, it's Jeremy Goldman.

[Jeremy Goldman]

Hey, Happy frozen custard day. I would have brought you something, but you're not with us in person.

[Marcus]

Even if I was, no need. It sounds horrible. I think I had it once.

[Jeremy Goldman]

Wasn't great America, it's really great.

[Yuri Wormser]

Sorry Yuri, it's a lot like ice cream. I'm not a huge fan, but I'll. I'll take it.

[Marcus]

Yuri said no. He doesn't like it either. Today's fact. What are the most digits of PI that have been memorized? So PI is a ratio of the circumference of a circle and its diameter. But how many numbers did someone memorize from the decimal place onwards? So three point. Then how many numbers on from there? Guesses?

[Jeremy Goldman]

Ooh, I don't know. But he was very popular in high school.

[Marcus]

Yuri, any guesses?

[Yuri Wormser]

I'm going to guess 600 and that just seems insane. But some people are really crazy that way. Who knows.

[Marcus]

Oh, or get ready for it. In. According to the Guinness World Records, In March of 2015, Rajvir Meena at the Vit University Velour in India reeled off 70,000 no decimal places of PI from memory.

[Yuri Wormser]

That is insane.

[Marcus]

It took him nine hours.

[Jeremy Goldman]

Nine hours without a meal to do that. Like you could have stopped at like half that and won the record, right?

[Marcus]

Yeah, probably.

[Yuri Wormser]

Wow.

[Marcus]

Remarkable. I mean, God bless the people who are there checking his work.

[Jeremy Goldman]

Oh my God.

[Marcus]

I don't even know what episode we did last.

[Yuri Wormser]

I can't remember. If I can't remember a phone number.

[Jeremy Goldman]

When someone says it, that's not good. Yeah. Wow.

[Marcus]

Impressive. Anyway, today's real topic, Google is AI killing Google Search. It might be doing the opposite, writes Asafich of the Journal. He explains that AI upstarts were supposed to lay siege to Google's search engine dominance. But so far, the defense Google is winning. He points out that one of Google's lines of defense has been its AI overview tool, where users can see answers generated by its Gemini AI model hovering above their traditional search results. And Google is also rolling out an AI mode that competes more directly with chatbots. But Yuri, has Google already fended off the AI search competition with its AI overviews feature? Put another way, Jeremy, I liked how you put this in your article, Yuri. He said, can Google slow the shift to AI challenges like ChatGPT and perplexity?

[Yuri Wormser]

I think they've been successful so far. I wouldn't say they've completely fended it off for good. It's an ongoing process. ChatGPT, Perplexity, Claude, all of these are going to continue to innovate, get more commercial type of searches, have more features. Google is doing the same with AI mode. The game's not over until that plays out. But so far I think they reported 2 million, 2 billion people are seeing AI overviews. It's a really impressive rollout and they're monetizing it. Well, so, so far so good for Google.

[Jeremy Goldman]

Yeah, I mean, I think, by the way, Marcus, we cannot forget the fact that from a, you know, we talk so much now about training data, right? And users are training data and Google can run so many different experiments at scale simultaneously to see what works and what doesn't in terms of monetizing AI search. And all these competitors we're talking about, they' doing a lot of really interesting things, but they're starting off of very small bases in relation to what Google has to work with. Right. And that just means that if Google is running the right experiments and drawing the right conclusions from that, they're going to be able to keep on growing and keep monetizing this space. And obviously they've, they have a little bit of money to spend. So in terms of innovation, just slightly.

[Yuri Wormser]

And consumer behavior is sticky. I mean, that's the thing you have to remember so that all that gigantic user base to Google has gives them Runway to make changes and gives them a bulwark against chatgpt in the short term. It's the longer term. We'll see. You know, if our, you know, once word of mouth spreads, I mean, already 700 million people are using ChatGPT, so a lot of word of mouth already. But you know, that stickiness gives Google a big advantage at this moment and controlling the interface.

[Jeremy Goldman]

Right. Which that's why the, you know, perplexities of the world with Comet and OpenAI with their plans. That's why they want to control the interface too. But you're going to have to give a really good experience to people if you're going to expect them to jettison Chrome.

[Marcus]

Yeah, yeah. I mean the, the pushback there. David Strifeld of the Times was saying OpenAI's ChatGPT has quickly become a viable Google competitor, pointing to analyst estimates showing that the daily total of ChatGPT queries is between 15 to 20% of Google search volume already, making it more of a threat to Google than Microsoft's B search ever was. However, Melissa Otto, head of research at S and P Global Visible Alpha, notes that the lack of ads on ChatGPT are helping to drive this early usage. So what happens if and when ChatGPT ads to it? Will it be as an appealing service as a Google? Maybe that'll slow things down in terms of adoption.

[Yuri Wormser]

There's no knowing exactly how, how ads will appear to on ChatGPT. They may have a different type, they may be much more subtle, they may monetize partially with by ads and partially by affiliate or shopping features or subscriptions.

[Jeremy Goldman]

So and objectively, right. Do you want to who would you trust more in terms of figuring out like a really strong ads model? The company that's already done it or the company that hasn't. Right. So it doesn't mean that ChatGPT can't or that these other nascent players can't, but Google has thus far. If you think about how like this, everybody loves to say this about like flying the ship while you're rebuilding it or whatever. That's what Google's doing right now. You know, they are serving up a lot of ads in a totally different way and calculating how much they need to get on a per ad basis while at the same time convincing advertisers that those ads are worth it and changing the the like essentially people's approach towards ads. Right. Like if you see ads now in an AI mode, what Google's trying to tell people is that you should perceive this ad as different because it's higher intent. Like maybe there are going to be less ads in general, you're going to have lower click through but there's higher intent. So in some ways it's an argument that retail media has made for a while. Right. Which is that it's okay to pay us more for this ad because a lot of these people who convert from the ad are going to actually buy your product. Right. So they're Rebuilding their whole entire company while at the same revenues. And that's not that easy to do.

[Yuri Wormser]

But, but I think it's, it's also a valid point that chatgpt with its pretty impressive traffic already has established itself as a legitimate competitor in a way that Google hasn't had in 20 years for, for traditional search. So I think we're just at the start of a pretty epic battle.

[Marcus]

Yeah.

[Jeremy Goldman]

And, and by the way, the definition of search is changing. Like if you think about how people search for things now we classify search as a particular type of spending and different from social media ad spending. But the way that human beings search now, they're often going to social, they're going to more and more different search engines and different types of experiences. So kind of there's no reason to not continue to expect this like bifurcation of what search is and it to just be on all these different platforms that are not necessarily Google.

[Marcus]

Yeah. So Yuri, I want to circle back to something that you'd said which was AI overviews being used by more and more people. You pointed out that Google just said that their tool now has over 2 billion monthly users. That's up from 1.5 billion in Q1. So very rapid growth. However, Mr. Fitch at the Times is pointing out that growing usage doesn't necessarily mean the ads business is safe. Now. They did grow 10% Google advertising in Q2, that's up from 11% last Q2. So decent growth, very decent growth, especially given how big that business is. But Mr. Fitch of the Wall Street Journal thinks the real test, Yuri, comes to what you were saying of Google search engine resilience lies in the future because whilst AI overviews are boosting how many links users see, metrics show, people aren't actually clicking on revenue generating links as much. Bright edge research showing that search impressions, the number of links that show up in searches even if they're not clicked, grew 50% in the year since the overviews were launched. So can they hike up the price of those remaining links that are going to be clicked enough to combat this, this trend? Because this doesn't look, it's just this part of it doesn't look good for Google.

[Yuri Wormser]

I think those prices are going to go way up because the intent of people who click through on generative search is usually much higher. So it's a much more valuable click and I think advertisers pay for it. The big. And I also, I think there'll probably be more search volume if you have more useful if the tool becomes More useful, you'll have more search volume. Is that enough to offset what you're going to lose from, you know, all the clicks you would have had otherwise, how many? You know, all these zero click searches are going to take away ad revenue? Is it enough our higher CPCs or CPMs or however they're going to charge for it and increased search volume going to be enough to offset that? And I think that's a completely open question.

[Jeremy Goldman]

There are some publishers that are going to be severely impacted by zero click, right? And if they're not getting a lot of clicks from Google, then does that just depress their ability to pay for Google Ads, which is something that they've been paying for for years. Right. So Google is walk this tightrope of trying to keep publishers alive. Who knows how. They don't necessarily care about the margins of the publishers, but they do want them to survive. Because if not, then Google is on the hook for creating all of that content. That makes Google very useful. Right. So if Google has to again walk that tightrope of trying to have a lot of utility and give people the answer while at the same time getting enough people to click through to then have these thriving businesses that see value in investing money back into Google.

[Yuri Wormser]

And it's not just media publishers, it's retailers too. Especially as Google gets into agentic purchasing, you know, sort of completing purchases on Google's platform, they start directly competing with retailers. They have to create a model that creates them as partners, otherwise they're just not going to be advertising anymore. They're not going to be. And you already see that with Amazon pooling some Google Ads, all Google Ads last week. So I think we're just going to see more and more of a strategic calibration going on for Google. How much do they offer on their platform without alienating all the data and advertisers that they also need?

[Marcus]

Yeah, I wonder if part of the conversation here is the kind of click versus query piece of this. Because we're so used to speaking in clicks, it's hard to think differently. Right. I was looking at some research on what AI overviews are doing to search behavior, and Pew Research said that users who saw an AI summary clicked on a traditional search result link in 8% of all visits. Those who did not see one clicked one twice as often. 15% of visits. And Google users are also more likely to end their browsing session entirely after visiting a search page with an AI summary than pages without one. So I wonder if we're so used to talking about clicks, but really when you're talking about using something like a ChatGPT, it's about questions, it's about queries, it's about impressions.

[Jeremy Goldman]

This is, by the way, this is the same thing that other platforms have had to talk about for years is like, what should you be focused on when you post something on LinkedIn? You, you might want to get 60 engagements, but you might actually, if you post a video, then you're going to be focused on watch time. And if you got people to watch your little video for 28 hours, then maybe Sophie, who does our social, will be proud of you. Right. So I think that a lot of it depends on the metric that you're looking at. You're spot on. And I know that, again, this is something that Yuri and I talked about offline, but could the model, in terms of how people are generally paying, or could it go from, you know, per click to like, per impression a little bit more? So, yeah.

[Marcus]

So the final piece of this for me in terms of Google fending other people off AI overviews, absolutely going to help. But the Journal article was pointing that Google has a track record of making devastating defensive moves when it needs to. Exhibit A, when search traffic was poised to shift to mobile phones two decades ago, Google bought Android and developed its own mobile phone operating system. Exhibit B, iPhones became ubiquitous. So Google started paying Apple billions of dollars to make its search engine the default in the company's Safari browser. And exhibit C, when Microsoft got a head start on the AI boom. When things really kind of kicked off about three years ago and there was concern about Bing taking market share from Google, that led Google to splash out on AI computing, and Microsoft didn't manage to really put a dent in it at all. So you'd be misplaced to underestimate how good Google is at defending itself and also how much money, Jeremy, to what you were saying earlier, it has to maintain its dominant position in the space.

[Yuri Wormser]

They have so many advantages, but there's also one major weakness or vulnerability they have right now, and that's antitrust. All of these moves that they've done in the past have raised the eyebrows of antitrust regulators and they've lost these two trials. Now, the remedy will come out within the next few days or weeks on the search one, which could see that them being forced to divest Chrome, I don't know if that's going to happen, but the latitude that they used to have on some of these big bets might be a little less than it was.

[Jeremy Goldman]

We should have two Versions of this episode where you need to say that's definitely going to happen and then we can cut that in after the fact. I mean, yeah, I agree. I definitely do not know what's going to happen. I think it's clearly a very important moment in time for them. I also think that building on your point to do certain moves right now, anything that the company does will be viewed maybe a little bit cynically and say, well, they know something that we don't as regulators. So let's look really hard at this in the same way that when Facebook bought Instagram years later, people said, oh wait, we should have known that we shouldn't have let you do that. And you know, wanted a bit of a do over. So now I think regulators are thinking much more proactively about this type of stuff. I would say the other, arguably I think it is a disadvantage right now is maybe being a public company that is competing with a whole lot of private companies. Because one thing that I looked at very closely is the capital expenditures that the company is making in relation to its core ad business. Like I looked at search and network and I excluded YouTube and the growth rate for, you know, that is, is not that high. Right? It's, we're talking about a lot higher growth. This was about like 10% over a period of, I think I looked at six to eight quarters versus it going up about 300% in terms of capital expenditures. That's a lot, right? And for these private companies, they're not viewed or judged in the same lens, which means that they might have a little bit more time to figure certain things out. Google, it has business model, but it's also held up to a lot more scrutiny as a result of being public.

[Marcus]

Yeah, I completely agree with that last point and that actually takes me nicely to my, to my next question because I want to talk a bit more about, about their earnings and what was most noteworthy for you guys with regards to their Q2 earnings? We mentioned that Google's ad revenue grew 10% this quarter. Q2 versus 11%. I think it grew the previous one. But the thing that's out to me was exact what you said, Jeremy. The company made over $70 billion in ad revenue in the quarter. It pocketed $28 billion in net income, which is pretty impressive, you would think. It's up 20% year over year. And investors were still underwhelmed. Shares only got a 2% bounce after the news. Why? David Streifeld of the New York Times pointing out exactly what you're Saying capital expenditures for the year will be $10 billion higher than the company had projected because of its booming cloud storage business, which means Google is now estimated to spend $85 billion on CapEx. A few years ago, Google was spending about a quarter of that. And because they're a public company, definitely something to watch as shareholders become wary of how much they're spending there for the future versus the returns that they're getting on the shares in the company. What stood out to you the most, Jeremy, with regards to Google's Q2 earnings.

[Jeremy Goldman]

In addition to the AI investment, the CapEx investment which we just talked about, I think one of the interesting things, building on AI everybody's talking about AI is going to take our jobs. And Google's headcount was up two and a half percent year over year. So if there's one company that could arguably afford to have less people and just have all the AI focus on it and just be really, really profitable, you know, it would be Google. But I think that there are a lot of companies that see AI as a growth engine. Right. And the fact that they are hiring when if anybody could automate everything, you could clearly say Google could do it. And that's not what we're seeing. You are seeing, obviously, a lot of companies that have, like, this kind of very conservative mindset that say, let's just go for having a bit more profitability, but let's just be smaller. And that's one way to go. But I think there are a lot of companies that say, okay, but what's the opportunity to create economic value based off of hiring people? And, yeah, those people might just do different jobs than they would have done a year or two ago, but that's not necessarily a bad thing.

[Marcus]

That's a good one. Yuri, how about you?

[Yuri Wormser]

I mean, I think the 85 billion was the number that popped in my mind, but for good reasons. Sundar Pinchai always had a reputation of being a somewhat cautious leader. I think he's really going all in on AI as he has to, and he's being pretty bold with his expenditure. So 85 billion, I think, is actually a good sign for Google. Not something to cut back there. You know, I wouldn't sell on that number. I'd buy on that number.

[Marcus]

Okay, well, that's what we've got time for for this episode. Thank you so much to my guests. Thank you to Yuri.

[Yuri Wormser]

Great to be here.

[Marcus]

And to Jeremy.

[Jeremy Goldman]

Pleasure as always.

[Marcus]

Yes, indeed. And thank you to the whole editing crew, to everyone, for listening to behind the Market. Video podcast made possible by a win. Make sure you subscribe and follow if you have the time. Leave a rating and review if you could. I'll see you guys on Monday, hopefully for that episode where we'll be checking out what's going on with Meta, Snap and Reddit. Happiest of weekends.