Overall, Alphabet reported strong results for the period, with total revenue rising 14% year over year to $96.4 billion. 

Central to this performance was “Google Services,” which generated $82.5 billion in revenue (up 12%), largely driven by Search ($54.2 billion) and YouTube ($9.8 billion), as well as its nascent subscriptions business ($11.22 billion). 

However, the Google Network business, which encompasses ads served on third-party sites and apps (such as AdSense and AdMob), stood out as a weak spot when compared to Alphabet’s overall performance, as its only business unit to report a revenue decline. 

Total Google Network advertising revenue was $7.4 billion during the period, representing a 1% year-over-year decline. This segment accounted for approximately 7.7% of Alphabet’s total revenue and about 9% of Google Services’ revenue, continuing its gradual decline as advertisers increasingly prioritize owned-and-operated properties, such as YouTube and Search. In contrast, Google’s search and YouTube revenues increased by 12% and 13%, respectively, during the period, driven by demand for Shorts and CTV ads. 

The decline in Network revenues illustrates a shifting dynamic: advertisers are favoring platforms with richer AI-driven formats, more accurate targeting and better performance measurement capabilities — areas where third-party network inventory often lags behind.

While not insignificant, Google Network’s contribution is shrinking in relative terms, both in size and strategic focus. It is increasingly overshadowed by faster-growing, higher-margin businesses like Cloud, which posted a 32% year-on-year increase in revenues to hit $13.6 billion, and subscriptions, which collectively now account for more than $11 billion in quarterly revenue.

Overall, it demonstrates how Google Network is increasingly a legacy revenue stream, contributing less to growth and offering limited upside amid the company’s pivot toward AI-powered first-party surfaces, subscriptions and Cloud solutions. While its Google Network revenues likely remain a stable but fading line on the income statement, some might take the latest results as a cue that, despite its public rhetoric, the online advertising giant may pose a faint-hearted resistance in the upcoming remainder of its ad tech antitrust case, which recommences in mid-September.

Perhaps it is this notion that has spurred Marketecture CEO, and ad tech veteran, Ari Paparo to buy Google’s AdX, the ad exchange at the center of the Justice Department’s antitrust case. Promising to address industry woes — such as eliminating dynamic allocation, sharing log files and replacing account managers with AI — the latest GoFundMe count falls short of the reputed $1 million target. 

His real aim? He maintains that his goal is to highlight Google’s dominance, but more realistically, it is likely a bid to promote his upcoming book, “Yield: How Google Bought, Built, and Bullied Its Way to Advertising Dominance,” due for publication next week.

Numbers to know

• 25% or less: the amount of respondents that claimed their firms uses AI for new code generation, per an Aperiam Ventures survey. 
• $185,000: The potential annual salary of AWS software engineers, according to Amazon listings compiled by Business Insider.
• $7.3 million: The amount raised in a seed round of funding by Vaudit, formerly BlokID. 
• 5.6%: the amount of U.S. search engine traffic generated by LLMs, according to CMO Today. 

What we’ve heard

“Agencies have been some of the largest users of AWS Clean rooms, and they are often bringing their own ‘special machine learning sauce’ and custom models that have been fine-tuned for clients (especially in healthcare).”

— In his reflection on this month’s AWS Summit hosted in New York City, Daniel Salmon, an equities analyst specializing in ad tech at NewStreet Research, notes how agents and nova models dominated the messaging, with some of the largest users of AWS Clean rooms. Common use cases are targeting consumers that are new to the brand, as well as improving ROAS

What we’ve covered

Google is slowly opening its black box — but marketers aren’t so convinced

Google’s latest Performance Max update teases transparency with a new channel-level reporting tool—but stops short of offering true control. Marketers can now view performance across Google’s platforms, but can’t act on the data or analyze broader trends, leaving many frustrated by the tool’s limited utility despite its promise of progress. The opacity, it seems, persists.

As S4 struggles, Sir Martin Sorrell keeps firing shots at the industry he created

Sir Martin Sorrell’s recent commentary has turned caustic, branding WPP’s consolidation a “disgrace” and casting doubt on its future under “weak leadership.” Yet his own venture, S4 Capital, faces steep decline. Critics call out the contradiction, but Sorrell remains defiant — blaming macro forces, not structure, and pledging a regional growth strategy to ride out the storm.

What we’re reading

Third-party scrapers are stealing publisher content to order for AI companies

AI companies are using third-party scrapers to access publisher content, even bypassing paywalls and bot protections. Despite efforts like Cloudflare’s default blocking of unauthorized AI scrapers, loopholes persist. A staggering volume of scraping, often masked by third parties, fuels AI models through techniques like retrieval-augmented generation—raising transparency concerns and prompting calls for stricter data-use standards.

Google seeks licensing talks with news groups, following AI rivals

Google is courting around 20 news outlets for a new AI content licensing pilot, aiming to ease tensions with publishers. The move follows similar deals by OpenAI and Perplexity, as media companies seek compensation for AI use. Details remain scarce, but the initiative signals a shift in Google’s approach to AI and news partnerships.

Google users are less likely to click on links when an AI summary appears in the results

Google’s AI Overviews appear to reduce traffic to publishers by summarizing results atop search pages. A Pew study found 58% of users encountered these summaries, and those users clicked links less often — especially the sources cited in AI results.

Index Exchange taps Trade Desk exec Marybeth McGaugh, plus 5 other industry vets 

Index Exchange has appointed several senior leaders to accelerate growth and innovation. Marybeth McGaugh joins as chief customer officer from The Trade Desk. Other key hires include PubMatic alum Robin Steinberg, svp of revenue, Prebid co-founder Michael Richardson, vp of product, ex-Google exec Jennifer Smith, vp of engineering, and SaaS veteran Daniel Perez as vp of brand marketing. 

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