Shares of Google’s parent company, Alphabet, fell by as much as 4% on Monday in the biggest single-day decline in more than two months. The slide followed a Sunday report by the New York Times that South Korean tech giant Samsung was considering switching to Microsoft’s Bing as the default search engine on its devices.
Bing is a minor player that has risen in prominence recently after the integration of artificial intelligence technology. Microsoft, a primary investor and partner of research lab OpenAI, the developer of ChatGPT, added a similar chatbot that is capable of having open-ended text conversations.
There was “panic” at Google as the potential switch by the world’s leading smartphone maker would put at risk around $3 billion of its $162 billion annual revenue, the outlet said, citing internal messages. The contract between Alphabet and the South Korean company is being negotiated, and Samsung could end up sticking with Google, according to the NYT. Another $20 billion is tied to a similar contract with Apple, which will be up for renewal this year, the report added.
The move signifies rising support for companies that are ahead in the AI race. Competitors such as Bing are quickly becoming a threat to Google’s search business, which has dominated the market with a share of over 80%.
To keep up with competitors, Google is working on several projects to update its existing search services with AI features. However, some analysts fear that the company could be falling behind Microsoft in the AI race.
“Investors worry Google has become a lazy monopolist in search and the developments of the last couple of months have served as a wake-up call,” Atlantic Equities analyst James Cordwell told Reuters.
Although Google has striven to make progress in adopting AI, it has encountered numerous setbacks, including a loss of $100 billion in market value in early February when its chatbot, Bard, collated inaccurate information in its promotional video.
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