Why AI is boosting Meta's ad business while hurting Google search
Meta's advertising business is outperforming Google's as AI-driven tools improve ad targeting on social platforms. Conversely, the rise of AI chatbots is threatening Google's traditional search-based ad revenue model.
Why it matters
The shift in how users interact with AI is fundamentally altering the digital advertising landscape, which is a primary revenue driver for the world's largest tech companies.
Google and Facebook have dominated the internet for the past two decades, turning billions of eyeballs into trillions in advertising dollars over that stretch. But with the ChatGPT era altering how consumers engage online, the companies are diverging.
In the third quarter , Meta's ad business grew more than twice as quickly as Google's Search and other unit, backing up Mark Zuckerberg's claim that his company's investments in artificial intelligence are leading to better targeting tools for brands to promote goods and services across Facebook and Instagram.
Google's problem is that chatbots are becoming an alternative to search, leading consumers to click far fewer blue links and hurting Google's ad revenue. Anthropic's Claude chatbot and Meta's recently launched Muse assistant are adding to the mix. Meanwhile, users are spending more time scrolling on Instagram, giving Meta more advertising opportunities.
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