This media and internet company says Google's AI has been a revenue killer

By Claudia Assis

Advertising side gets hurt in part because of Google AI Overviews

Barry Diller, IAC's chairman. The bulk of IAC's revenue comes from the media division, People Inc., that saw revenue shrink 2% year over year.

Media and internet holding company IAC Inc., led by digital-media mogul Barry Diller, late Monday reported revenue below Wall Street's expectations and pointed to a growing concern among others in the same business.

That's the heightened presence of Google AI Overviews, a relatively new feature of Alphabet Inc.'s (GOOGL) (GOOG) Google Search that appears at the very top of query results.

Shares of IAC (IAC) dropped more than 8% in the extended session Monday, after ending the regular trading day up 1.1%. The stock lost another 1% on Tuesday.

AI Overviews uses generative AI to provide users with an overview of a topic, but may bury sites where people would ordinarily seek information about an issue.

IAC's media brands include instantly recognizable print and digital names such as People, Food & Wine and Better Homes & Gardens, to name a few. The company reported third-quarter revenue of $590 million, or $10 million less than the FactSet consensus for the quarter.

The bulk of its sales come from the media division, People Inc. That saw revenue shrink 2% year over year to $430 million, mostly because of declines in print. Digital revenue in the division was up.

But some of that revenue growth was tempered by a 3% drop in digital advertising revenue, due to AI Overviews penetration. Or, as IAC put it, "the impact of the increasing prominence of Google AI Overviews on Google search sessions."

Alphabet said last week its Google Search business has remained strong. On a post-earnings call, Chief Executive Sundar Pichai said that overall queries and commercial queries have continued to increase thanks to AI Overviews and Google's AI Mode. Google Search revenue rose more than 14% year on year to $56.57 billion in the third quarter.

IAC, for its turn, also reported a wider-than-expected quarterly loss: It lost 27 cents a share in the third quarter, whereas analysts polled by FactSet had expected a loss of 24 cents a share.

People Inc. is the "heart of our future" alongside IAC's investment in casino operator MGM Resorts (MGM), CEO Diller said. Diller doesn't seem afraid of AI: He also praised People Inc.'s licensing deal with Microsoft AI.

People Inc. has signed a deal with Microsoft Corp. (MSFT) to be one of the publishers building Microsoft's Publisher Content Marketplace, a two-sided content marketplace that would compensate publishers for use of their content by AI. Microsoft's AI Copilot assistant would be the first buyer, the company has said.

-Claudia Assis

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11-04-25 1250ET