The highly anticipated "AI business model": Google takes the lead by introducing ads in Gemini.

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Google is introducing new personalized advertising features in its AI shopping tools, marking a key step for the tech giant in the race to monetize AI.

On Sunday, Google announced that advertisers will be able to offer exclusive deals to consumers preparing to buy products via Google’s AI models, powered by its Gemini model. This move represents a major shift from Google's traditional advertising approach.

Vidhya Srinivasan, Google’s Vice President of Ads & Commerce, said, “This is a concept that goes beyond our traditional search ads model,” enabling retailers to provide value to AI-powered shoppers at crucial moments “to close the deal.” Google’s AI will decide when to show offers based on users’ shopping behavior and likelihood to purchase.

This comes as AI chatbots threaten Google's traditional “sponsored” ad slots, which bring in tens of billions in revenue annually. At the same time, Google is looking to capitalize on the momentum of its latest large language model, Gemini 3, which has made progress competing with OpenAI’s GPT-5.

Google has also launched the "Universal Commerce Protocol" to allow shopping agents to research products and complete purchases within its platform. The protocol has been co-developed with major retailers and marketplaces like Walmart, Target, and Shopify.

Going Beyond the Traditional Search Ads Model

Google’s new ad feature will allow brands to offer highly personalized ads—such as discount codes—via its chatbot, putting it a step ahead of its AI competitors. This feature will use contextual information from conversations between users and the AI chatbot, triggering offers for relevant products the user has clicked on.

Retailers can set the offers they wish to provide, and Google’s AI will decide the optimal time to show deals to potential customers. Existing Google Shopping partners include pet brand Petco, cosmetics retailer e.l.f. Cosmetics, and luggage manufacturer Samsonite.

Srinivasan stated that Google is initially focusing on discounts in its pilot program and will expand to support offers with other attributes, to help shoppers prioritize value beyond price, such as bundles and free shipping.

The AI Monetization Race Heats Up

Google is leveraging its vast market share in online search to showcase its AI models to billions of users, via “AI mode” added to its search pages last year. Its standalone chatbot Gemini remains less popular than ChatGPT.

Last month, OpenAI paused internal discussions about advertising products after CEO Sam Altman said ChatGPT’s “red code” needed improvement. The move was prompted by concerns that competitors are closing the gap on its early lead in cutting-edge technology development.

AI companies including OpenAI, Microsoft, and Perplexity have been racing over the past year to launch e-commerce features in their chatbots, seeking new ways to generate revenue from their popular but costly AI products. According to a report by the Financial Times, OpenAI has rolled out its checkout feature, taking a cut of sales made via ChatGPT.

Tech Giants Bet on AI Shopping

On Thursday, Microsoft launched Copilot Checkout, which also offers recommendations and checkout services within its AI chat. Microsoft stated that users who shopped with Copilot increased their purchasing volume by 53% within 30 minutes of the interaction, compared to those who did not use the feature.

Google CEO Sundar Pichai said at the National Retail Federation’s annual event in New York, "We need to work together. I think if we do this well, it will be an extraordinary moment of expansion."

Google’s "Universal Commerce Protocol" allows shopping agents to research products and make purchases without leaving its platform. The protocol was co-developed with major retailers and marketplaces like Walmart, Target, and Shopify.

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