Google, Microsoft split on how to profit from AI agents

Alphabet ↘ 1.45% CEO Sundar Pichai said Google will bring AI agents to everyday consumers later this year, starting with the Gemini app. On the same evening, Microsoft ↘ 1.55% CEO Satya Nadella said Copilot's business model is growing beyond per-seat subscriptions to include consumption-based charges. Both companies reported quarterly results on Wednesday, October 28, and the calls showed how differently they plan to make money from agents. Microsoft is leaning on metered billing, while Google is pointing to a future advertising opportunity, Benzinga reported.benzinga.com

Google's path from enterprise to consumers

In his prepared remarks, Pichai said Google started with the Gemini agent for enterprise "because the bar for security, safety, and governance is extremely high." Next, he said, the features will come to Search "and also, of course, to our billion users on the Gemini app." He added that "agents will operate as a unifying layer across our products," with plans to extend them to Chrome, Android and Workspace. Morgan Stanley analyst Brian Nowak asked about the consumer rollout. Pichai said it would come later this year, "obviously starting with 1 billion users in our Gemini app," according to Benzinga. The Verge also reported the timeline.theverge.com+2

Google is building distilled, lighter versions of its Gemini 4 Carbon model to lower serving costs, MarketWatch reported. The advertising comments came from Chief Business Officer Philipp Schindler, not Pichai. Answering a question from a Bank of America ↘ 2.21% analyst, Schindler called agentic experiences "clearly additive" and said he was "really excited about the advertising opportunities in an agentic world," Benzinga noted.benzinga.com+1

Microsoft bets on consumption

Nadella said, "Our business model is expanding from per seat subscriptions to include consumption, expanding our TAM and ARPU," according to the call transcript. He said that "as agents take on higher-value work, consumption opens up business funded demand." The number of Copilot customers using usage-based credits grew more than 75% in the quarter. Credit consumption from agentic features on GitHub has more than doubled since usage-based billing began. Microsoft first added usage-based billing alongside per-seat pricing in July, GeekWire reported. Chief Financial Officer Amy Hood said the company did not give an updated Copilot seat count this quarter, according to a transcript.finance.yahoo.com+2

Diverging market reactions

Microsoft reported fiscal first-quarter revenue of $92.3 billion, up 19%, CNBC reported. Alphabet reported revenue of about $127.6 billion, slightly below analyst estimates. Its shares fell sharply after hours, while Microsoft's rose, according to Benzinga. The question now is whether investors will reward Microsoft's metered revenue, which is already coming in, or Google's longer-term bet that agents can make money through ads.cnbc.com+1