Google introduces AI Mode sparking a change in conversation

AI Mode is a part of the company’s push to remain competitive in the conversational AI space as tools, like ChatGPT, have transformed how people search for and find information online.

AI Mode uses the capabilities of Google's Gemini 2.0 AI model and is a marked change in how the tech giant is reacting to what is a rapidly changing market – a market it had dominated for such a long time. No longer do users want to piecemeal together all the information they need – now they want conversational and context aware interactions where the chatbot can understand and respond to input based on the context of the conversation. It’s what they’ve come to expect.

A conversational search experience

AI Mode transforms the traditional search interface into a chat-style environment, allowing users to input complex, multi-part queries and receive comprehensive, AI-generated responses. Unlike standard search results that present a list of links, AI Mode synthesises information from various sources to provide a cohesive answer. Users can then engage in follow-up questions, enabling a more conversational, interactive search experience.

At the Developers Conference, Alphabet (Google-parent company) CEO, Sundar Pichai, called it: “A total reimagining of search with more advanced reasoning.”

Pichai noted that users are already entering queries two to three times the length of traditional searches.

Powered by a custom version of Gemini 2.0, AI Mode employs a 'query fan-out' technique, conducting multiple related searches simultaneously across diverse data sources. This approach allows the system to handle nuanced questions that would typically require several separate searches. Additionally, AI Mode supports multimodal inputs, allowing users to incorporate text, voice, and images into their queries.

Advertising and revenue considerations

Google’s core business – search – represents nearly 60% of its revenue. However, with AI-generated answers replacing traditional link-based results, there is growing concern about how the company will maintain its ad-driven income. To address this, Google said it is exploring new monetisation methods, including features like virtual fitting rooms that use AI to let users try on clothes digitally. It is also trialling visual product cards and sponsored content within AI Mode, though how this might scale remains unclear.

This change arrives at a legally complex time. A US judge has ruled that Google is unlawfully maintaining a monopoly in the search market, and one proposed remedy includes a forced sale of its Chrome browser. However, Google argues that competition has significantly increased since the original case began in 2020 – pointing to the rise of AI chatbots as evidence. Currently, Google's search engine handles nearly 90% of all Internet queries, but that statistic does not reflect the rapidly growing share of AI tools in how people seek information.

Industry and legal implications

The rollout comes amid mounting pressure from rivals. OpenAI’s ChatGPT, for instance, has an estimated 84% of the global chatbot market, while Google’s Gemini accounts for only around 2.5%. Not only this, Apple’s recent announcement that it may offer AI options like ChatGPT in Safari within the next year has further heightened the urgency for Google – the announcement brought about a 7.5% stock plummet for the tech company, which Forbes called the “largest single-day drop in years.”

The deployment of AI Mode has also elicited concerns from news publishers, who argue that the feature may divert traffic away from their websites. The News/Media Alliance has criticised AI Mode for allegedly using content without proper compensation or permission and is urging regulatory intervention.

What does the future hold?

While Google’s AI Mode may offer a more efficient way to get answers, it also brings with it a realisation that the way traffic is directed across the Internet is changing. With fewer links presented to users, the company may not only risk undermining the dual ecosystem of the publishers and contents creators that it relies on for click-based revenue, but it also runs the risk of giving false information and with nowhere to click to verify facts or sources it could inadvertently spread misinformation.

It's a tough balance for the company because technology is evolving faster than ever and competition is only intensifying, so now it must now figure out its next steps to figure out how it will balance innovation, retain revenue, and enable content sustainability – all whilst under close regulatory scrutiny.