💰 Google bakes ads into AI answers

Also: OpenAI Microsoft deal clears IPO path

Author

Evolving AI
September 12, 2025

In partnership with

Welcome, AI enthusiasts

Google’s search is getting a big shake-up: ads are now showing up directly inside its AI-generated answers. That means when you ask Google a conversational question, you’ll see ads sitting right alongside the AI’s response. Advertisers are also getting new tools to make targeting these spots even easier. Let’s dive in!

In today’s insights:

  • Google bakes ads into AI answers

  • OpenAI Microsoft deal clears IPO path

  • Photoshop gets Nano Banana

Read time: 4 minutes

LATEST DEVELOPMENTS

Source: Google

Evolving AI: Google now puts ads straight inside its AI-generated search responses.

Key Points:

  • Ads appear directly in AI answers, including how-to and shopping searches.

  • The new AI Max tool lets advertisers run these campaigns across Google Ads platforms.

  • Publishers risk losing traffic and revenue as Google shifts from middleman to content creator.

Details:

Google is rolling out AI-generated search answers that include ads worldwide. Users asking conversational questions now see ads embedded next to AI advice. AI Max, available in beta across Google Ads tools, makes it easy for advertisers to target these answers. This strategy helps Google capture more ad dollars as traditional link-based searches decline, tightening its control over the ad market.

Why It Matters:

Ads are moving into the answer box, which means buyers can catch intent before a click; flip on AI Max, fence a test budget, and try conversational themes since it’s now in global beta across Google Ads, Editor, SA360, and the API. Expect new creative and brand-safety knobs to arrive next, with text guidelines slated for fall. For publishers, zero-click pressure grows as AI Mode inches toward default access, cutting referral upside unless your content is cited or captured elsewhere. Policy heat is rising too: fresh EU fines and U.S. remedies talks raise the odds of deeper changes to Google’s ad stack.

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Source: AFP via Getty Images

Evolving AI: OpenAI and Microsoft reach a new agreement that could pave the way for an OpenAI IPO.

Key Points:

  • OpenAI and Microsoft settle terms for their next partnership phase, easing IPO concerns.

  • Microsoft plans heavy investment in its own AI models while staying open to others.

  • OpenAI’s nonprofit parent retains authority and a stake worth over $100 billion.

Details:

OpenAI and Microsoft announced a fresh agreement giving OpenAI more freedom to use other cloud providers and clarifying governance, which had been a sticking point. Microsoft, having invested $13 billion, will continue sharing ChatGPT and API revenues while building its own frontier AI models. OpenAI’s nonprofit arm keeps control of the for-profit unit, valued at more than $100 billion, even as it pursues an eventual IPO.

Why It Matters:

This pact means developers and companies using OpenAI can expect steadier pricing and access as infrastructure grows beyond Azure. It signals more competition in top-tier AI models, giving enterprises flexibility to mix and match providers without worrying about vendor lock-in. Investors eyeing an OpenAI IPO can now factor in a clearer governance setup, which may speed up capital flowing into new AI tools and services.

Evolving AI: Adobe adds Google's Nano Banana image AI to Photoshop for seamless edits.

Key Points:

  • Google’s Gemini 2.5 Flash Image, nicknamed Nano Banana, joins Photoshop as an optional tool.

  • It works with Generative Fill to expand or modify images with higher consistency than Adobe Firefly.

  • Rollout is planned for September.

Details:

Adobe is integrating Google’s Nano Banana image model, officially Gemini 2.5 Flash Image, into Photoshop. The tool pairs with Generative Fill to let users expand or alter photos with sharper, more reliable edits. Adobe’s own Firefly can’t match this consistency yet, making the addition a timely upgrade as the company competes in AI-driven image editing. Launch is expected this September.

Why It Matters:

Creative teams get a new engine inside Generative Fill that keeps people and products consistent across edits and composites. Expect fewer manual masks, cleaner swaps, and quicker variants for ads, ecommerce and social. Pick Gemini 2.5 Flash Image when you need reliable likeness from shot to shot, keep Firefly for its style range and familiar prompts. Output carries Content Credentials and SynthID watermarking for audit trails, shifting time from pixel pushing to creative choices.

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