Google and OpenAI Pour In Tens of Trillions...Turning to Ads and Shopping to Recoup Their Bets

Global big tech companies are moving to build new revenue models by combining shopping and advertising functions with their generative artificial intelligence (AI) services. This appears to be an effort to dispel concerns over the enormous costs of AI investment.

Director Gupta Manish introducing Google AI Gemini. Yonhap News

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According to Bloomberg News on the 11th (local time), Google said in a letter sent to advertisers that it has tested a new ad format that allows retailers and advertisers to suggest products in "Google Search AI Mode." Users can purchase products directly through Gemini, while sellers can provide potential buyers with customized discounts through a "Direct Offer" feature. Vidhya Srinivasan, Vice President overseeing the company’s advertising and commerce division, said, "We are not just inserting ads into the AI experience of search, we are redefining the very meaning of advertising."

Google began integrating shopping and AI agents earlier this year. To enable consumers to complete payments directly within the AI environment, it has formed partnerships and built related protocols with major companies such as Shopify, Target, and Walmart. Referring to a future in which AI agents shop on behalf of users, Vice President Srinivasan explained, "This move is about laying the foundation for an agentic future in which every commercial experience is connected seamlessly and without friction."

Beyond Google, other big tech firms have also begun in earnest to monetize the everyday use of AI. They are shifting from merely selling subscriptions to AI services to focusing more intensively on revenue generation. Bloomberg News projected that advertising and commerce revenue are likely to play a key role in helping major companies such as Google, Amazon, Meta, and Microsoft (MS) cover the astronomical sums they are investing in AI infrastructure. These companies alone are set to pour in an enormous budget of 650 billion dollars (about 941.2 trillion won) this year.

Recently, OpenAI began testing ads within "ChatGPT" in the United States. The company has decided that advertising is the fastest way to generate revenue from users who do not want to pay for a subscription. Ads can be presented based on the user’s conversational context and interactions. For example, if a user searches for a recipe on ChatGPT, ads for meal kits or delivery services may be displayed. However, during the test period, no ads are shown to accounts that are verified or presumed to be under 18 years old. Ads are also not displayed for sensitive or regulated topics such as physical and mental health or politics. Perplexity, a competitor to ChatGPT, is likewise rolling out AI features that it says will fundamentally change how people shop online.

While these moves may reassure investors, politicians are far less enthusiastic. Senator Elizabeth Warren expressed concerns in a letter about infringements on consumer privacy and the potential for excessive spending inducement. In response, Google reaffirmed its existing stance that it strictly prohibits practices in which higher prices are set on Google Shopping than on a seller’s own website. OpenAI, addressing worries that advertising might influence ChatGPT’s answers, stated, "Ads have no impact whatsoever on ChatGPT’s responses, and conversations with users are kept private from advertisers."

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