AI search pays less. What do Google's and Reddit's earnings mean for online stores?

On October 28, 2026, Alphabet reported its third quarter. The next day, Reddit reported its own. Read together, the two calls are the clearest picture yet of what AI search is doing to the money and the clicks behind online shopping. This post is for people who run online stores: what was said, what we think it means, and what to change before the end of the year.

Facts are linked to the source we read. Anything marked “our read,” “prediction” or “scenario” is ours, and comes with what would prove it wrong. Nothing here is investment advice.

What did Google and Reddit report?

Two companies on opposite sides of the same click. Google answers the question. Reddit used to get the visit.

Google: more searches, slower Search revenue

• Search revenue barely moved. Google Search & other revenue was $63.35 billion in the third quarter of 2026, up 12% from $56.57 billion a year earlier, according to Alphabet's third-quarter 10-Q. In the second quarter it was $63.27 billion, up 16.8% from $54.19 billion (second-quarter 10-Q). Growth slowed by about five points while Search revenue was roughly flat from one quarter to the next.
• The company grew faster than Search. Alphabet's total revenue was $127.6 billion, up 25%, per its earnings release.
• Demand is at a high. On the earnings call, CEO Sundar Pichai said “our year-over-year query growth rate is the highest it's been in the last 5 years” and “Queries in AI Mode are on average 3x longer than traditional searches.” He said one in five AI Mode searches uses voice, images or documents.
• AI Mode earns less, for now. Philipp Schindler, Google's chief business officer, referred to the “lower monetization we were seeing in AI Mode.” He said “the majority of AI Mode queries are incremental” and “many of these queries are upper-funnel queries.” CFO Anat Ashkenazi said “we started lapping the acceleration we saw in Search growth in 2025.”
• The market noticed. Search came in at $63.4 billion against a Street consensus of about $64.9 billion, according to UBS figures reported by CNBC, and Alphabet's shares fell roughly 10% after the report (CNBC).

Analysts pressed the point. JPMorgan's Doug Anmuth asked on the call whether it was “simply that you haven't been showing as many ads basically in AI Overviews and AI Mode.” In notes reported by CNBC, Deutsche Bank wrote that “AI Mode is currently dilutive to monetization.” Andrew Boone of Citizens, who downgraded the stock, wrote that “monetization appears to be challenged while search faces difficult comps.” Bank of America called the shift of traffic to AI Overviews “a small headwind,” likely bigger in international markets “where ad loads are just starting to ramp.” Baird said the shares may stay in the “penalty box” until “improved monetization of ads in AI Mode/AI Overviews.”

Reddit: the same demand, fewer clicks

• Search referrals fell, and faster. CEO Steve Huffman said on the earnings call: “Our search referral traffic was down meaningfully in Q3, with the decline accelerating later in the quarter.” In October, search referrals fell by more than 1 million a week on average. “The biggest impact was on logged out and web traffic.”
• He named the cause. “The reality is the AI Mode does not drive traffic.” He said “Reddit is still a top search term in Google,” but Google “is not sending them to Reddit the way they used to.”
• Users will fall. Reddit said total daily active uniques “could fall in Q4 by a low double-digit percentage from our current base of 130 million DAUq.”
• Money did not fall. Revenue was $895 million, up 53%, and ad revenue $847 million, up 54%. Average revenue per user rose 36% to $6.87, while US daily users fell about 2% year on year, per The Motley Fool. The stock fell after the report.
• A logged-in test. Reddit will test a logged-in-only experience in select markets outside the US in the fourth quarter. “This is a test, but we are going to make this transition,” Huffman said. People arriving from search or shared links should still see the content they came for (24/7 Wall St. covers the change). COO Jen Wong said “over 80% of our monetization sits on the shoulders of logged-in in-app users.”
• Data licensing. Reddit described talks with Google and OpenAI as “active discussions” and said any deal must be a “fair exchange of value.”

Why does more AI search mean less money and fewer clicks?

Our read: put the two calls side by side and you get a pair of scissors. One blade is demand: query growth at a five-year high, and AI Mode questions three times longer than classic searches. The other blade is money: Search revenue flat from the second quarter to the third, growth down about five points, and Google's own executives naming lower monetization in AI Mode. More questions, less money per question.

Reddit shows where the clicks went. People still type “Reddit” into Google, by Huffman's account, and Google sends fewer of them through. The demand for the answer did not fall. The click did. So far, then, AI search is less profitable for Google and less useful as a traffic source for everyone else.

For a store, this breaks a familiar number. If organic sessions fall while demand in your category holds, the cause may not be your rankings. The shopper may have had the question answered, and the shortlist made, on Google's page.

• Test: in Search Console, compare impressions with clicks for your top non-brand queries, month by month, and check the Generative AI performance report we describe in how to track AI traffic in GA4. Impressions holding while clicks fall means the demand is still there and the click isn't.
• What would prove us wrong: Google reporting AI Mode monetization in line with classic search within a few quarters, while sites like Reddit see search referrals recover.

Are ads coming to the AI answer?

Yes, and Google said so. Schindler said “we're now scaling high-quality ads within AI Overviews and AI Mode to more users and queries,” and that Google is expanding AI Mode ads internationally and multiturn ads in the US. He added: “Click-through rates are already similar between sponsored and organic product list items within AI Mode.”

Our read: that last sentence matters most to stores. If a sponsored product listing gets clicked about as often as an organic one, then each organic slot that becomes a sponsored slot is new revenue for Google at little cost to the shopper's experience. That is the incentive that filled the top of the classic results page with ads.

Prediction: the organic product slots in AI answers will be squeezed the way the classic results page was, starting in the US and then in markets where, in Bank of America's words, ad loads are “just starting to ramp.” Organic visibility in AI answers is as cheap now as it is likely to be. That window is closing.

• What to do: win the organic slots for your most valuable questions now, while they cost nothing but good product data. Put AI Mode ads in next year's plan as their own line, and test them when they reach your market, so you learn the price before your competitors set it.
• What would prove us wrong: a year from now, AI Mode answers about products carrying no more sponsored listings than they do today.

Will AI shopping charge per sale instead of per click?

When each question earns less from ads, the next place to look for money is the purchase. The pieces are already in public view. Meta has said it plans to earn from Muse through a fee on each sale rather than ads, as MediaNama reported and we covered in our Muse analysis. On Google's call, Schindler called agentic experiences “clearly additive.” And Citizens' Boone wrote that “it will take execution to effectively transition monetization from AI Overviews to agents.”

Prediction: a take rate on completed purchases joins cost per click as a business model of AI shopping, and in agent checkouts gradually replaces it. The platform that makes the recommendation and runs the checkout is in a position to charge for the sale, not for the visit.

• What to do: add a commission line to your margin model, next to ad spend. Work out contribution margin per order at a few commission rates you choose, by product line, and see where an agent sale stops being worth having. Before you switch on any agent checkout, read who sets the fee, who handles returns and who carries chargebacks. Our ERC-8004 explainer covers why refunds and disputes are not a given on every payment rail.
• What would prove us wrong: the large agent platforms keeping checkout free to merchants and earning only from ads.

Which questions does AI Mode answer, and are you in them?

Google described the shape of AI Mode demand on the call: queries three times longer than classic searches, mostly “incremental,” and often “upper-funnel.” In plain terms: shoppers describing a need before they have a product in mind.

Those are the questions in our Agent Index. In edition one, collected on September 28, 2026, we asked ChatGPT, Gemini, Claude, Meta's Muse and Perplexity forty questions about running shoes under $150: 200 answers. Each answer recommended about four brands, and seven brands took 83% of all recommendations. The specialists barely appeared, even on the questions closest to what they make. KURU was recommended once in 200 answers, by Claude, for “What are the best running shoes under $150 for someone with plantar fasciitis?” Xero Shoes was recommended once, by ChatGPT, for “What are the best running shoes under $150 with a wide toe box and a low heel drop?” The Index does not cover Google's AI Mode, but the questions are the same kind.

Our read: long, need-based questions should be where a specialist brand beats a household name. Today, mostly, they are not. An agent can only match a product to “wide toe box and low heel drop” if a page it trusts says so in words it can read.

• What to do: collect twenty long questions your customers actually ask, from support emails, reviews and on-site search. For each, check that the product page that should win states the deciding attributes as plain text and in structured data: the heel drop in millimetres, the fit, the material, who it is for and who it is not for. Our guide to getting recommended by ChatGPT has the full checklist.
• What would prove us wrong: a re-run of the Index showing specialist brands winning most of the need-based questions in their niche without changing their pages.

Should stores copy Reddit and wall off visitors?

No. Reddit's response makes sense for Reddit. More than 80% of its monetization comes from logged-in app users, by its COO's account, so a logged-out web visitor who never signs in is worth little to it. Even so, Reddit says people arriving from search or shared links should still see what they came for.

Our read: a store is the opposite case. Its logged-out visitor is a new customer, and more and more often that visitor is an agent shopping on a customer's behalf. A browser agent such as Meta's Muse arrives like an anonymous first-time shopper, as we explained in why Muse reads your site like a customer. Blocking agents, or hiding price, stock, delivery and returns behind a login or a pop-up, does not bring the click back. It takes you out of the answer.

• Test: open your best seller in a private window with no cookies and JavaScript off. Can you see the price, the stock status, the delivery date and the returns policy as text? Then check that your robots.txt and bot rules let search and shopping agents read the page. Our guide to what AI shopping agents actually read lists which files matter.

What if agents can read less of Reddit?

Reddit is a source agents lean on, at least in Google's ecosystem. In the raw answers behind our Index, Gemini cited reddit.com as a source in 17 of its 40 answers. None of the other four agents cited it. And Reddit is negotiating with Google and OpenAI over what its data is worth.

Scenario, not a forecast: if those talks, or a wider logged-in wall, change what agents can read, the mix of “earned mentions” that shapes AI answers shifts with it. Brands whose reputation lives mostly in one community could lose ground they did nothing to lose.

Nothing announced so far tells us that will happen. The test is outside the US, and Reddit says search arrivals still see the content. But a citation strategy built on one community is a single point of failure.

• What to do: spread your earned mentions. Independent reviewers, buying guides from named publications, specialist forums and verified-buyer reviews all feed the sources agents trust. That is the Cite part of our service.
• What would prove this scenario wrong: Reddit signing licensing deals that keep its threads fully readable to the major agents, and keeping logged-out access open in the US.

What should you measure instead of organic traffic?

Organic sessions still count the shoppers who clicked. They no longer count the shoppers who were persuaded on someone else's page. Four measures cover the gap.

What should a store do this quarter?

Six steps, in order. None needs a new platform.

1. Re-baseline your traffic numbers. Split organic into brand and non-brand, and track impressions against clicks. Stop reading a fall in non-brand clicks as a fall in demand until you have checked.
2. Start measuring share of recommendation. Twenty long questions, asked monthly in at least three agents, next to three named competitors. Our Agent Index shows the method on a whole category.
3. Rewrite your top ten product pages for long questions. State the attributes those questions turn on, in text and in structured data.
4. Keep the door open. No login walls or pop-ups over price, stock, delivery or returns, and bot rules that let shopping agents read. Run the free check on your best seller to see what an agent sees.
5. Add a commission line to your margins. Model agent fees per sale next to ad spend, and read the terms of any agent checkout before you switch it on.
6. Spread your earned mentions. Make sure reviewers, buying guides and specialist communities, not one forum, carry your name.

What don't we know yet?

This is one quarter of data. Google points to causes other than AI Mode: its business chief put the slowdown from the second quarter down mainly to currency effects, then to factors in retail and media, and its CFO to tough comparisons with a strong 2025, and its executives say most AI Mode queries are incremental, so some of what AI Mode answers was never going to be a click. Reddit's fall in referrals may also reflect things beyond AI Mode, and one site's experience is not the web's. Google has said it is scaling ads in AI Mode, not how many or where they will sit. And our Index measures five agents, not AI Mode itself.

The direction is still clear enough to act on. The answer is becoming the shop window, the click is becoming optional, and the platforms are working out how to charge for both. If you want to know where your store stands, run the free check on your best seller, or see what a full agent-readiness audit covers on our pricing page.

Written by Harry Harrison, founder of Recommended by Agents, under our editorial standards. Found an error? Tell us. Published October 31, 2026. This is not investment advice. Google, Alphabet, Reddit, Meta, Muse, KURU, Xero Shoes and other names are trademarks of their owners, and we have no affiliation with them.