Dilemma of Ad Transparency: Google and Microsoft Face Backlash for Ad Inclusion in AI Trials

Alphabet Inc GOOG GOOGL Google and Microsoft Corp's MSFT inserting of ads into AI trials without any opt-out option has irked some brands.

Microsoft is testing ads in the Bing AI chatbot by migrating some traditional search ads and inserting them into the AI responses, Reuters reports.

Both companies are in the early stages of testing ads in generative AI features in their race to revamp their search engines with AI capable of written responses to open-ended queries.

Some advertisers were concerned about marketing budgets spent on features available to a limited number of users. Advertisers also want control over where their ads appear online.

Microsoft and Google said existing guard rails on their search engines would also apply to their AI search features.

The two companies have splurged billions into generative AI with Microsoft's multibillion-dollar bet on ChatGPT parent OpenAI and Google's $400 million stake in Anthropic.

However, multiple large advertisers, including Wells Fargo & Co WFC, temporarily pulled their ad spending from Microsoft. 

Microsoft recently launched hotel ads in the Bing chatbot and is working to introduce ads for other industries, like real estate.

Three ad buyers expressed concerns over Microsoft's lack of transparency in reporting.

Two media buyers from significant ad agencies flagged how the search firms would prevent ads from appearing on AI responses with false information, according to Reuters.

Price Actions: MSFT shares traded lower by 0.19% at $322.78 premarket on the last check Thursday. GOOG shares traded lower by 0.02% at $122.91.