Google's running scared

It’s not often that Google's parent company Alphabet takes an L, but yesterday, shares dropped X% after news of a potential disaster on the AI chatbot front broke.  

Driving the news: In what would be the most shocking break-up since Tom Brady and Gisele Bündchen, Samsung is reportedly considering dropping Google as the default search engine on its Android smartphones in favour of Microsoft’s Bing, per The New York Times

  • Google and Samsung’s search contract is currently up for negotiation and apparently brings in ~US$3 billion in annual revenue for the search giant.
     
  • A similar agreement covering Apple devices, which brings in ~$20 billion annually for Alphabet, is also up for renewal later this year. 

Why it’s happening: Artificial intelligence. Microsoft’s partnership with ChatGPT-maker OpenAI has positioned Bing as the frontrunner for the AI-powered future of search. Some now see Google as a laggard, especially after Bard (its chatbot) flopped during its debut.

  • Bing’s new AI chat feature has also faced its fair share of criticism, but that’s because it was pretty overwhelming, whereas Bard was considered underwhelming. 

In response, Google has gone Victor Frankenstein mode in the lab, creating life in the form of new AI-powered features for Search that could go public in the US as soon as next month. 

Why it matters: Google is Google. It’s never faced any real search competition—you know, owning ~93% of the global search market and all. Samsung’s doubt marks the first real sign that Google’s unmatched search dominance on your phone is no longer a sure thing. 

  • While Bing is still far behind Google, Microsoft reported a marked increase in users since adding AI-enhanced features, passing 100 million daily active users last month.

Bottom line: This could end up as a win for consumers, as legit competition would motivate search companies to offer better services. The catch is that it gives AI an increasing role in search, which is already making some folks a little nervous.—QH