AI CHATBOTS MISINFORM CUSTOMERS ABOUT HALF OF LONDON’S SMALL BUSINESSES, RESEARCH FINDS
LONDON SMES RISK LOSING CUSTOMERS AS AI CHATBOTS RETURN FALSE BUSINESS INFORMATION
New research suggests artificial intelligence is creating a new visibility challenge for Britain’s small businesses, with popular AI chatbots frequently providing inaccurate information that could influence customer purchasing decisions and divert valuable enquiries away from SMEs.
Artificial intelligence is rapidly becoming the next frontier in online business discovery, but a new study suggests many small businesses are already losing out because AI systems simply do not know enough about them.
Research by London-based AI visibility platform Searchable found that leading AI chatbots—including ChatGPT, Google’s Gemini and Perplexity—returned false information for around half of London SMEs when asked routine questions that prospective customers would typically ask before making contact.
The study analysed more than 13,000 prompts covering businesses across the capital, asking AI systems about services, contact details, staffing, websites, founding dates and other commonly requested information before comparing the responses against verified company data.
SMEs Face Greater AI Visibility Challenges
The findings suggest smaller businesses are significantly more vulnerable to AI misinformation than larger organisations with established digital footprints.
According to the research, AI platforms produced false information about London SMEs 56% more frequently than they did for major brands, while larger companies experienced misinformation rates of 32%.
The report also found that AI models were five times more likely to confuse or misidentify the brand name of a London SME than a larger business headquartered in the capital.
As more consumers begin using AI-generated summaries instead of traditional search results, inaccurate information could increasingly influence purchasing decisions before a customer ever visits a company’s website.
Digital Authority Matters More Than Ever
Searchable believes the disparity largely reflects the way Large Language Models learn from information published across the internet.
Businesses with strong digital authority—built through news coverage, reputable directories, review platforms and other trusted online sources—are far more likely to be accurately represented by AI systems.
Chris Donnelly, Co-founder of Searchable, said: “It’s important that more small businesses are aware of how they appear in AI systems, particularly in the more popular Large Language Models, and especially when they are being misrepresented with the wrong information.
“AI tends to surface and correctly represent companies more often when they have a larger digital footprint, and when they are actively being validated in authoritative parts of the web, such as news publications, directories, review sites and relevant community platforms.”
AI Recommendations Influence Customer Behaviour
The commercial implications could be significant.
Searchable points to recent Similarweb research showing consumers are more than twice as likely to visit a company’s website within seven days when that business is recommended by an AI platform compared with competitors that are omitted.
Across businesses of every size, the study found employee numbers, websites, founding dates, telephone numbers and service descriptions were among the information AI systems struggled to reproduce accurately.
When incorrect answers, incomplete responses and situations where AI could provide no answer at all were combined, 93% of businesses experienced at least one example of misinformation.
AI Search Becomes A New Business Battleground
The findings arrive as regulators place increasing scrutiny on AI-powered search.
The Competition and Markets Authority (CMA) recently instructed Google to apply objective, non-discriminatory criteria when ranking both traditional search results and AI Overviews, while also requiring greater transparency around significant algorithm changes. Google has been given six months to implement the measures.
For businesses, the research highlights the emergence of AI visibility as an increasingly important extension of traditional search engine optimisation.
Donnelly said: “LLMs have been hallucinating information for as long as they have been around, we can’t control the mechanics of how they work. But when a brand is surfacing correctly more often within AI summaries, there’s a much clearer opportunity for them to attract high-intent customers.”
As AI-powered search continues moving into the mainstream, businesses may increasingly find that their online reputation depends not only on how they rank in search engines, but also on how accurately they are represented by artificial intelligence itself.
