Google testing ads in AI-powered search as news publishers warn of looming disaster

Google unveiled plans to place advertisements directly in its new AI-powered search results – adding fuel to concerns by news publishers that the controversial overhaul of the world’s most popular search engine will devastate site traffic and ad revenue.

The tech giant will begin testing search and shopping ads within its auto-generated AI Overviews – which was rolled out for US users last week and effectively demoted links to content providers that traditionally appeared at the top of results.

In one example from Google’s Tuesday blog post on the subject, search results for the query “how do I get wrinkles out of clothes” included a “sponsored” section with ads for Downy and other laundry brands within the “AI Overview.”

The company said the sponsored ads will appear “when they’re relevant to both the query and the information in the AI Overview.”

Google derives the vast majority of its annual revenue from digital advertising, which generated $237.86 billion in revenue in fiscal 2023 alone.

The Justice Department and several states are currently suing Google for allegedly maintaining an illegal monopoly through its advertising technology platform.

The Mountain View, Calif-based company also faces a landmark DOJ lawsuit targeting its online search empire, where it maintains a whopping 90% share of the market. A federal judge is expected to rule on that case later this year.

The company’s stock was down 1% in Wednesday morning trading.

Google and Microsoft-backed OpenAI have faced sharp criticism for using publishers’ content to “train” their AI chatbots without proper credit or compensation — and then deploying AI in a way that further cuts into their audiences.

The latest ad tests will likely exacerbate the outcry, according to noted tech industry expert Shelly Palmer.

“Problematically, while ads in AI Overviews might be good for Google, they do nothing to remunerate or support the creators and publishers of the content they have trained on to deliver the AI Overview itself,” Palmer said in a Wednesday newsletter about Google’s ad tests.

The Post reached out to Google for comment.

As The Post has reported, advocates had already warned Google’s latest AI overhaul will be a nightmare for cash-strapped news publishers and content creators.

Last week, News Media Alliance CEO Danielle Coffey – who leads a nonprofit that represents more than 2,200 publishers, including The Post – called Google’s plans a “perverse twist on innovation” that will be “catastrophic to our traffic.”

“Google’s new product will further diminish the limited traffic publishers rely on to invest in journalists, uncover and report on critical issues, and to fuel these AI summaries in the first place,” Coffey told The Post. “It is offensive and potentially unlawful to accept this fate from a dominant monopoly that makes up the rules as they go.”

Google has pushed back on the concerns, stating that news publishers will still receive traffic from search and that simpler search queries will still yield a more traditional set of links in the results.

“We see that the links included in AI Overviews get more clicks than if the page had appeared as a traditional web listing for that query,” Liz Reid, the head of Google Search, wrote last week. “As we expand this experience, we’ll continue to focus on sending valuable traffic to publishers and creators.”