- Google said that AI agents can automate shopping, but users will still want choices.
- Investors have long argued that AI chatbots and agents will threaten Google's search business.
- Google's Q3 revenue fell short of analyst expectations, and shares fell 10% after hours.
Google has a pitch for advertisers worried AI agents will make Search obsolete: Let the bots do the shopping legwork, but leave people to compare brands, prices, perks — and sponsored offers.
"When users shop, and that's important, there's a part of the journey they don't like, the grunt work, which is frankly fantastic to automate with AI," Philipp Schindler, Google's chief business officer, said on Alphabet's earnings call on Tuesday. "But we also want to enhance, not just automate away the discovery experience that people frankly love in so many cases."
He said users do not always want the cheapest option; they also weigh brand loyalty and customer service. Google believes that this decision-making process gives it space to build ads into agentic shopping.
He shared an example of how that might work: "Here's the insurance product we found, and here's another strong option, one of which is a higher premium, maybe a lower deductible, and they are currently offering a very special discount."
Schindler added that there is almost never a single perfect solution for any shopping decision, which makes Google "confident" that there is room for advertising even in agentic search.
The comments offer a clearer explanation of Google's business model for agentic search, which has presented a challenge for its core ads business. On Tuesday, the company said that Google's AI mode has led to more searches than ever, but it's not making money at the same rate. It's a major concern among investors, who have long argued that AI chatbots and agents will threaten Google's search business.
Google has been signaling for months that it wants to solve that problem without simply cramming old-style ads into a chatbot. Last quarter, Google said it was testing ideas like showing offers during travel planning and clearly marked sponsored links inside AI-generated lists.
Alphabet reported third-quarter revenue of $127.58 billion, narrowly below the $127.97 billion analysts expected. Earnings per share came in at $2.12, versus roughly $3.01 expected, largely because of an $8.2 billion unrealized loss on its SpaceX investment. Shares fell about 10% after hours.
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