Alphabet Inc witnessed a nearly four percent decline in its shares following reports that Samsung Electronics is contemplating replacing Google with Microsoft-owned Bing as the default search engine on its devices. The New York Times published the report over the weekend, highlighting the increasing competition faced by Google’s $162 billion-a-year search engine business from Bing, which has gained prominence after integrating artificial intelligence technology, including ChatGPT.
The report suggested that Google’s response to the potential threat was characterized by a sense of “panic,” given the significant annual revenue of approximately $3 billion generated from the Samsung contract. Additionally, another $20 billion is linked to a similar contract with Apple, set for renewal this year.
In a response to Reuters, Google stated that it is actively working on introducing new AI-powered features to enhance its search capabilities but refrained from commenting on its association with Samsung. Samsung, on the other hand, did not provide a response to Reuters’ request for comments.
Google has long been the dominant force in the search market, with a share of over 80 percent. However, concerns on Wall Street have emerged about the company potentially falling behind Microsoft in the rapidly evolving artificial intelligence (AI) landscape.
Following Alphabet’s $100 billion loss in value on February 8 due to issues with its chatbot Bard, which shared inaccurate information, and an underwhelming company event, the stock experienced a further dip to $104.90 on Monday, leading to a nearly $50 billion reduction in Alphabet’s market capitalization. In contrast, Microsoft outperformed the broader market with a one percent rise.
Investors are expressing concerns about Google being perceived as a complacent monopolist in the search domain. Analyst James Cordwell from Atlantic Equities noted that recent developments have served as a wake-up call, and the potential costs associated with making Google Search more competitive than AI-powered Bing could be a source of worry.
The New York Times report indicated that Google is in a race to develop an entirely new AI-powered search engine, promising a more personalized experience than its current service. The existing service is also slated for an upgrade with additional AI features.
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