For twenty years, the web ran on one simple deal. You typed a question into Google. Google sent you to a website. The website earned money from the visit — an ad seen, a product bought, a subscription started — and that money paid for the next thing the website made. The click was the whole economy.
AI is now tearing up that deal from both ends at once. And this week’s earnings showed the tear in hard numbers.
Start with the scoreboard, because it is startling. In the third quarter, Meta’s advertising revenue rose 26% from a year earlier, to $63.1 billion, according to CNBC. Google’s Search and other unit — the biggest money machine in internet history — grew 12%, to $63.4 billion. Read that again: after two decades on top, the two businesses are suddenly the same size, and Meta is growing more than twice as fast. The 14-point gap between their growth rates is the widest in Meta’s favor since 2021. Google still collected an additional $11 billion from YouTube in the quarter — but the crown jewel, search itself, is the part that is slowing.
Meta’s half of the story is a comeback. When Apple changed iPhone privacy rules in 2021, it blinded Meta’s ad targeting — the company suddenly knew far less about what you might want to buy. In 2022, Meta’s revenue fell for the first and only time in its history. AI rebuilt the machine. Instead of tracking you across the internet, Meta’s systems now predict what you will stop scrolling for. A year ago, the company plugged an AI business assistant into Ads Manager, the tool advertisers use to build campaigns. Meta’s chief financial officer, Susan Li, told investors that advertisers who followed the assistant’s recommendations drove almost 5% more conversions and increased their advertising investment by 9% compared with similar advertisers who did not. Almost 10 million advertisers used at least one of Meta’s AI tools in the third quarter.
In plain English: you never have to tell Meta what you want. It works it out from the scroll — and the scroll never ends, which means the ad slots never end either.
Google’s half is stranger, because Google is competing with itself. People still search — more than ever, in fact. Google says search queries hit a record in the quarter. But a growing share of those questions now get answered on Google’s own page, through AI Overviews and AI Mode, which hand you a summary instead of a list of links. Ask, read, done — no click required. Add chatbots like ChatGPT and Claude, and Meta’s own Muse assistant, and the old habit of clicking a blue link is quietly breaking. Analysts at UBS warned that Google’s results would bring search “cannibalization fears right back to the forefront.” Nate Elliott, an analyst covering AI at Emarketer, told CNBC that if people find tools they like better than Google, search habits could change for the first time in a generation — and that the shift is “potentially catastrophic for Google’s ad business.”
Now sit in the chair of everyone else on the web — the news sites, blogs, stores and forums that Google’s answers are built from. Every question answered on Google’s page is a visit that never happens somewhere else. Chartbeat data cited in a Digiday industry report shows Google search traffic to publishers fell 34% over the past year, and nearly half the publishers Digiday surveyed — 47% — said AI search has already impacted the referral traffic they get. Bernstein pointed to the quieter tell inside Google’s own numbers: revenue from Google’s Network and AdSense business — the ads Google places on other people’s websites — fell 4% in the first quarter, even as search itself boomed. The answers are getting better. The visits that pay for the answers are disappearing.
That is why Wall Street is bracing for a changing of the guard. Bernstein analyst Mark Shmulik has noted that Meta captured nearly half of every new digital advertising dollar spent in the second quarter — in an industry with dozens of rival platforms fighting over the same money. He expects Meta to pass Google Search in advertising revenue before the end of 2026, and he suspects Meta may already have caught up on a like-for-like basis, once you strip out the extra Google businesses, like Maps and Gmail, that sit inside the search unit’s numbers, Yahoo Finance reported. Be clear about what that claim is not: Google’s total advertising empire, YouTube included, is still far bigger. What is wobbling is the throne everyone assumed was permanent — the search box.
Investors are not calm about any of it. Alphabet just had its worst day ever on the stock market, plunging more than 12% and wiping out about $500 billion in market value after its earnings disappointed, CNBC reported. Meta’s stock fell 14% in October, its worst month since October 2022. Both companies are spending at historic levels to build AI — Google projects up to $205 billion in capital spending this year, Meta up to $145 billion — and the spending has pushed both into negative free cash flow. The difference is the cushion. Advertising is 98% of Meta’s sales, so Meta has to win this. Google now gets less than two-thirds of its revenue from ads, and its cloud business just grew more than 100% to $31 billion in the quarter. Meta is all-in on the ad machine. Google is buying itself other futures.
The News Desk’s read: The real fight here is not Meta versus Google. It is over who owns the moment a question gets answered. For twenty years, that moment belonged to the open web — a search sent a reader out to a site that had earned the visit. Now the answer lives on the platform’s page, and the sites that supplied the knowledge get a citation instead of a customer. The web that survives this will not be the one a search engine feeds. It will be the one people visit on purpose — destinations they trust enough to open directly. Every site on the internet, big or small, is now in the business of being worth the trip.
