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S&P Global — 29 May 2024

Daily Update: May 29, 2024

AI-Enabled Search Spells Trouble for Digital Publishers

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By Nathan Hunt

Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy

For decades, Google and the digital publishing industry have had mutually supportive business models. Digital publishers have allowed their content to be crawled by Google. In fact, they have optimized their content to match the needs of Google’s search algorithm. Google, in turn, has referred traffic to these digital publishers through its search platform. Google and the digital publishing industry have optimized this traffic through ads, both on the search platform and on publisher websites. 

However, AI-enabled search signals the end of this system of mutual support and dependency. AI-enabled search generates answers to search queries on the Google platform, eliminating the need to refer organic search traffic to publisher websites. The traffic can be retained by Google or monetized through paid search. 

According to S&P Global Ratings, the rollout of AI Overviews on the Google search platform will impact some digital publishers more than others. Publishers with more organic traffic and greater name recognition will retain an advantage over publishers who depend on paid traffic from third parties.

Google, the largest search engine platform, has a global market share of more than 90%. Most publishers depend on Google search for some amount of the traffic they monetize. Changes to the Google search algorithm over the years have resulted in some websites receiving more or less traffic. Digital publishers try to stay abreast of Google search algorithm changes to retain traffic.

Digital publishers have raised concerns that AI-enabled search uses their intellectual property as a large language model to train AI engines. Some are seeking relief from Google and other search platforms through litigation and legislation. The New York Times and eight newspapers owned by Alden Global Capital have each sued OpenAI and Microsoft for copyright infringement. Google and Meta have both appeared reluctant to pay for licensed content from news organizations. A prior agreement between Meta and a group of more than 30 news organizations was allowed to lapse this year. 

Google has insisted that its AI Overviews prompt users to visit a greater diversity of websites for help with more complex questions, and that the links included in AI Overviews got more clicks. However, S&P Global Ratings has expressed skepticism and believes that traffic to digital publishers is likely to decline. No immediate rating actions have been taken, pending more information about the long-term impacts of AI-enabled search.

Today is Wednesday, May 29, 2024, and here is today’s essential intelligence.

EU Carbon Rally Pauses, Prices Hover Near Eur75/Mtco2e

European carbon prices rose sharply in the week to May 24, supported by a rallying gas complex and better demand from the industrial sector. EU Allowances rose almost Eur7/mtCO2e ($8/mtCO2e) to almost Eur77/mtCO2e at one stage but fell to near Eur75/mtCO2e on May 24 on weaker auction results. EUAs were trading at Eur74.49/mtCO2e late in the morning, ICE data showed.

—Read the article from S&P Global Commodity Insights

Flash PMIs Signal Faster Developed World Growth In May, Led By The US

The flash PMI data for May from S&P Global brought encouraging news on economic growth, with output of the combined manufacturing and service sectors rising across the four major developed economies — the “G4” — at the fastest rate for a year. Inflation pressures meanwhile eased, down to one of the lowest levels for over three years. The rate of inflation signaled nevertheless remained stubbornly by pre-pandemic standards, having been stuck in a narrow but elevated range over the past year. There were, however, some notable variations in the growth, and most importantly, the inflation trends among the four economies.

—Read the article from S&P Global Market Intelligence

Election Jitters Cloud The Picture For South Africa's Banks

The prospect of radical changes in South African politics has given bank investors pause and threatens the sector's outlook at a time when credit quality is under pressure. For the first time since the end of apartheid, the ruling African National Congress (ANC) may lose its outright majority when the country votes on May 29, forcing it into a coalition government with rival parties. One of those is the populist left-wing Economic Freedom Fighters (EFF), which wants to, apart from embarking on a process of nationalising various sectors, set up state-owned lending institutions in areas like agriculture and housing, and implement new thresholds for minimum black and female ownership in banks.

—Read the article from S&P Global Market Intelligence

Pemex Crude Output Falls Below 1.5 Mil B/D In April For First Time Since Cantarell Discovery

Crude production by Mexico's state-owned oil and gas company Pemex fell below 1.5 million b/d in April, data from the national upstream regulator showed May 23. The figure, the lowest in over 40 years, shows how the output from the new fields developed in the current administration has not been enough to compensate for the decline of older, larger legacy fields which were once the bedrock of the Mexican petroleum industry.

—Read the article from S&P Global Commodity Insights

Asian Paraxylene Braces For Softer H2 As Surging Stocks Restrain China Demand

After the challenging first five months of 2024, participants in the Asian paraxylene market are gearing for more pain in the second half, as top consumer China battles growing domestic inventories along with higher production, while global demand recovery remains nascent. Asian PX prices averaged at $1,031.72/mt so far this year, recovering from a year-to-date low of $1,001/mt reached on May 14, according to Platts assessments by S&P Global Commodity Insights. However, prices remained below the January-May 2023 average of $1,045.29/mt.

—Read the article from S&P Global Commodity Insights

Listen: Next In Tech Bonus Episode: RSA Conference Special Report

In this special report from the RSA Conference, we hear from seven of the team who were there at the event. It’s a set of quick takes on the latest trends and take aways from the conference in discussions with host Eric Hanselman. Whether it’s AI, cybersecurity or M&A, there was a lot going on and a lot to sort out.

—Listen and subscribe to the podcast from S&P Global Market Intelligence

2024 South Africa Conference: Between A Rock And A Hard Place (June 4, 2024)

This event will discuss potential policy shifts following the May general elections, sovereign-bank nexus in light of the implementation of a resolution regime and S&P Global Ratings’ outlook on South African corporates. Hear from S&P Global Ratings' senior analysts, renowned industry experts, engage in interactive panel discussions and connect with other market participants in person.

—Register for the in-person event from S&P Global Ratings