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.
"It's a double-edged sword, because as AI revolutionizes discovery, people might come across tools they like better than Google," Nate Elliott, an analyst covering AI at Emarketer, told CNBC in an email. "If ChatGPT or Claude or Muse is better at helping them find what they're looking for, people's search habits might change for the first time in a generation. That's potentially catastrophic for Google's ad business."
Meta's ad revenue rose 26% in the quarter to $63.1 billion, up from $ 50.1 billion a year earlier, compared with 12% growth for Google's search division, which brought in $63.4 billion. That 14-point growth gap is the widest in Meta's favor since 2021, and it puts the two businesses neck and neck by size, though Google got an additional $11 billion in third-quarter revenue from YouTube.