Google and AI - Why I think it's in a great danger of blowing it's own feet

I'll start by saying that I love Google products overall and I'm willing subscriber of Gdrive and not so willing of YouTube Premium as of recently. In today's world Google is seen as one of the leaders and potential winner in the western AI race. ChatGPT made LLM mainstream but Gemini imposed itself to everyone using Google search by giving you the AI overview of your search query and now more than even pushing you for full AI mode after the first search. This large bubble in the bottom right on desktop Chrome suggesting to switch to full AI mode I saw first time today. Why is this a big deal? Because Google makes \~56% of it's revenue thru Google search advertising. With everything Google has to offer to users and companies, over a half of the revenue is from search adds and if you add AdSense (only declining sector so far), its over 60% of the revenue that comes from advertising. Traffic Decline to web sites (info sourced by Claude) A September 2025 study by Seer Interactive found that organic click-through rates plummeted 61% (from 1.76% to 0.61%) for queries with AI Overviews, while paid CTR crashed 68% [Dataslayer](https://www.dataslayer.ai/blog/google-ai-overviews-the-end-of-traditional-ctr-and-how-to-adapt-in-2025). Globally, Google search traffic to publishers declined by a third in the year to November 2025 [Press Gazette](https://pressgazette.co.uk/media-audience-and-business-data/google-traffic-down-2025-trends-report-2026/). According to Similarweb, search traffic to websites decreased by 55% between April 2022 and April 2025 [Euronews](https://www.euronews.com/next/2025/08/03/google-ai-summary-feature-deals-blow-link-clicks-and-website-traffic). Specific examples include: * Business Insider saw organic search traffic fall 55% between April 2022 and April 2025, leading to 21% staff cuts [AdExchanger](https://www.adexchanger.com/publishers/the-ai-search-reckoning-is-dismantling-open-web-traffic-and-publishers-may-never-recover/) * Some fashion, travel, DIY, and cooking websites have experienced traffic declines of up to 70% [Whistler Billboards](https://www.whistlerbillboards.com/marketing/the-impact-of-googles-ai-overviews/) * Chegg reported a 49% decline in non-subscriber traffic in January 2025 Google's ad revenue increased 14% in Q4 2025 while website hits are dropping of the cliff. From Google's last earnings call you'd get the impression that their business is booming but if your view shifts to advertisers perspective it's never been worse. This is because advertisers are paying more and at the same time getting less for their money. Majority of adds payers are small and medium businesses. For how long these businesses will be able to ramp up their spending on Google adds (just to reach previous website traffic) before they hit the wall on advertising ROI is yet unknown. What is known is that small and medium businesses are much more vulnerable than large ones and their budgets are lot less elastic to be able to follow and compensate for drop of the revenue and increase in cost of advertising. What I've seen first hand is that I'm not clicking almost any links while using AI although Google is very much trying to portray to advertisers that things are good. My guess that value of Google adds dropped by a large margin in last few years not by their revenue to the company but by value to the advertisers. And this is going to show sooner than later. I expect that advertisers spending keeps rising until they can afford it. Cost of their business has increased and many will be squeezed out. Google will hike the price of adds to compensate less customers. I think their current business model is broken, it's just not clear because of sound looking revenue. If you have broken core business and you're going forward with 200b $ capex into the very thing that is killing the core, there's a fair chance the whole thing is going to implode.