Meta's advertising revenue jumped 26% year-over-year to $63.1 billion during the third quarter, while Google's search and other division grew at less than half that pace to reach $63.4 billion. Google's traditional link-based queries are facing rising competition from alternatives like Claude, ChatGPT, and Meta's Muse, prompting the company to rely on its cloud computing unit, which doubled to $31 billion. Meanwhile, Meta is using automated assistants and generative tools to eventually build a subscription business that diversifies its ad-reliant model.
Key points
Heavy infrastructure investments have driven both tech giants into negative free cash flo…: Heavy infrastructure investments have driven both tech giants into negative free cash flow territory.
Wall Street wiped roughly $500 billion from Alphabet's market valuation following a histo…: Wall Street wiped roughly $500 billion from Alphabet's market valuation following a historic 12% post-earnings decline.
Meta is developing AI business assistants to ultimately establish an independent subscrip…: Meta is developing AI business assistants to ultimately establish an independent subscription revenue stream.
Sources checked by our analysis pipeline: 1
Google and Facebook have been dominant internet brands 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 do a lot less clicking on blue links, and thus hurting Google's ad revenue. Anthropic's Claude chatbot and Meta's recently launched Muse assistant are adding to the mix of options. 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…
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