Google pushes AI shopping features in search and Gemini chatbot

By Carmen Arroyo, Bloomberg

Google is adding a way for consumers to buy things while seeking artificial intelligence-powered answers on search and in its Gemini chatbot — part of a plan to make money more directly from consumers’ AI use.

The Alphabet Inc. company has been testing new ad formats on Google Search’s AI Mode that will allow retailers and other advertisers to offer products there, the company said in a letter to the advertising community on Wednesday. Users can also now buy items from Etsy and Wayfair within Gemini, the company said. A new feature called Direct Offers within AI Mode will allow brands to offer discounts to potential shoppers.

“We aren’t just bringing ads to AI experiences in Search; we are reinventing what an ad is,” said Vidhya Srinivasan, the Google vice president overseeing ads and commerce.

Now that consumers have gotten in the habit of using AI, tech companies are working to make money from the chats, beyond selling subscriptions. Ads and commerce will help fund the billions in capital AI companies plan to spend on infrastructure. Spending by Google, Amazon.com Inc., Meta Platforms Inc. and Microsoft Corp. is slated to reach a record $650 billion in 2026.

OpenAI recently started testing ads in its ChatGPT chatbot in the US, betting that advertising is the fastest way to make money off users that won’t buy premium subscriptions. The ChatGPT maker and rival Perplexity AI Inc. have also introduced AI features designed to change how people shop online.

At the start of this year, Google began to integrate AI agents into its shopping experience, with a new method that standardizes payments and digital identity, Srinivasan said. The company partnered with business including Shopify Inc., Target Corp. and Walmart Inc. for this protocol that helps consumers do checkout directly in Google’s AI products.

This “is helping to lay the foundation for a future where all commercial experiences can be seamless and agentic,” Srinivasan said, referring to the potential for an AI agent to do shopping on a users’ behalf.

Still, Google’s move toward AI shopping has drawn scrutiny from Washington, with Senator Elizabeth Warren saying in a letter that she’s concerned over consumer privacy and consumers being pushed toward higher spending. Google has previously said it prohibits merchants from showing higher prices on Google than what’s on their website.

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