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More than three years after the release of ChatGPT shook Google to its foundations, the AI advertising wars are finally breaking out. OpenAI opened hostilities at the end of last week by outlining its plans to bring search-like ads to its chatbot. The news, though, did not even cause a ripple in the new-found equanimity of Alphabet investors.
The lack of drama reflects a heightened appreciation of how entrenched Google is, as well as the belated success it has had with its own AI models. But the disruption from the technology is in its early stages. The ways people find information and make purchases online, and what part ads play in the mix, are very much up for grabs.
OpenAI’s path to this point has had a certain inevitability about it, closely echoing Google’s early days. Both companies initially showed a distaste for the idea of advertising before conceding that, if your ambition is to reach everyone, this is an effective way to monetise.
Days earlier, meanwhile, Google began testing a way for advertisers to place product ads alongside the AI-powered results it now delivers inside its search engine.
This emerging competition is very much what US federal judge Amit Mehta had in mind last year when deciding not to take more drastic action to curtail Google’s search monopoly. The rise of AI, he said, represented a powerful new form of competition. Since that ruling, momentum has swung heavily towards Google, thanks to its well-received new Gemini 3 model and a deal to underpin Apple’s AI. Its advantages in terms of distribution and personal data also look daunting.
As a standalone chatbot, Gemini lags behind ChatGPT. But injecting AI into its search engine has given Google instant access to one of the biggest online audiences. Earlier this month it also started to draw more personal data into Gemini, letting users connect their Gmail accounts and other Google services to the AI system. This move, which it calls Personal Intelligence, stands to greatly enhance its ad targeting.
That is a very different environment from when Mehta made his ruling. Yet even if Google has a powerful head start, it is far too early to predict how this will play out. AI is likely eventually to be highly disruptive to the advertising market as new forms of online behaviour powered by the technology catch on.
One indication of how Google is preparing for this was its release this month of something called the Universal Commerce Protocol. A technology standard to help retailers build their own shopping agents and interact with others, this is part of a growing base of technology that could start to replace human attention — the lifeblood of online advertising — with a growing degree of machine-to-machine interaction.
UCP joins a list of other protocols designed to automate online activity. This started a little over a year ago with Anthropic’s Model Context Protocol, which enables AI assistants and agents to tap into data held on other companies’ servers, and has since grown to include standards for agents to interact with other agents (A2A) and to make payments on behalf of users (AP2). If internet users find the services made possible by these technologies a more convenient way to get things done, old forms of online engagement are likely to wither.
Advertising is still likely to play an important part, even as machine-to-machine interaction becomes more prevalent. At some level, purchases reflect customer preferences, and influencing that preference will always have value. But how and where that influence happens will change.
The use of shopping agents, for instance, may shift where advertising is placed. If shoppers use a retailer’s own agent to sort through its inventory, then this should give a boost to advertising on the retailer’s site. But if they instead rely on a service such as ChatGPT as their primary agent, and even complete their purchases there, then retailers stand to lose not only advertising but an important point of connection with their customers. At the same time, automation could eat into the volume of advertising as people rely on agents to act for them and spend less time researching. If so, then ads delivered at the right moment will become even more valuable.
It is too early to tell how this will ultimately affect the search ad market. It may become bigger, as AI tempts people to bring more of their purchases online. Or it might shrink, as automation replaces human attention. Either way, OpenAI’s first tentative steps into advertising mean Google will no longer have this market largely to itself.
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