How Google Dodged the AI Search Collapse

Core Insights - Alphabet's Q3 2025 earnings revealed a 15% increase in Search-and-other advertising revenue, exceeding $56 billion, contrary to expectations that AI would diminish its core business [1][3][5] Group 1: Resilience of Google Search - Google Search has maintained its strength by integrating the Gemini AI model into its results page, enhancing ad performance and retaining commercial intent that chatbots struggle to replicate [3][5][11] - The assumption that LLM-powered interfaces would divert users from Google did not materialize, as user habits remained intact despite the introduction of AI summaries [4][5][12] - Google's early integration of AI into Chrome and Search prevented competitors from gaining traction, reinforcing its dominant market position [6][12] Group 2: Advertiser Behavior and Commercial Intent - Advertisers have not shifted to AI chat interfaces due to the lack of high-value commercial intent in those platforms, which are primarily used for drafting and summarization rather than shopping [8][10] - The introduction of AI tools like ChatGPT did not yield effective purchasing flows, as they failed to support structured e-commerce processes [9][10] - Google's application of Gemini for optimizing ad matching and bidding has led to improved conversion rates for retail and travel advertisers, contributing to incremental ad growth [11][12] Group 3: Competitive Landscape and Future Threats - AI enhancements have bolstered Google's legal standing by demonstrating innovation, making it harder for regulators to argue against its market dominance [7] - Despite current momentum, potential threats exist from LLMs that could narrow the gap between discovery and transactional behavior, as consumer habits can shift rapidly [14]