Google’s parent company Alphabet loses $55 billion in stock market value as Samsung is reportedly considering replacing Google with Bing in its mobile devices.
Google parent Alphabet’s stock slipped as much as four percentage points on Monday, shedding about $55 billion in market value after a New York Times report suggested competition in the mobile search services market is intensifying.
According to the report in the US Daily, the South Korean company Samsung is considering replacing Google as the default search engine on its devices in favor of Microsoft’s Bing Search. Such a move could jeopardize Alphabet’s annual revenue of about $3 billion. A similar deal between Alphabet and Apple, which brings Alphabet about $20 billion in annual revenue, is set to be renewed later this year.
“Panic” among employees
Google employees were shocked to learn in March that Samsung was considering replacing Google with Bing, writes the New York Times. Internal messages from Alphabet employees seen by the newspaper showed “panic” among employees.
AI competitors like the new Bing could become the most serious threat to Google’s search engine business. Google’s search engine has an annual turnover of 162 billion US dollars. With a market share of 80 to 90 percent, Google has long held a monopoly in this market segment. She could be in danger.
Google has been concerned about AI-powered competitors since OpenAI, a San Francisco start-up partnering with Microsoft, unveiled a chatbot called ChatGPT in November. Meanwhile, Microsoft is investing billions more in OpenAI and strengthening its AI division.
Work on AI search engine
In response to the new competitors, Google is working flat out to develop an all-new search engine based on AI technology, according to the New York Times. Last month, Google launched its own chatbot, Bard, but it didn’t appear to be fully mature yet. Alphabet’s stock lost $100 billion in market value on Feb. 8 after Bard shared inaccurate information in a promotional video that drew mixed reactions.
The existing Google search engine is also to be upgraded with AI functions, according to the newspaper with reference to internal documents. According to this, a team of more than 160 Google employees is working full-time on it. According to a media report, Google plans to introduce text AI in its search engine as early as May.
Lots of money and market share at stake
However, that might not be enough if Samsung decides to set Bing as the default search engine for the hundreds of millions of devices it ships every year. Microsoft integrated OpenAI’s ChatGPT into its Bing search engine earlier this year.
But even if an agreement is reached between Samsung and Microsoft, Google could still be made the primary search engine on Samsung devices. To do this, however, users would have to change the phone settings themselves.
Samsung has a longstanding relationship with both Alphabet and Microsoft, as it preinstalls various apps from both companies on its devices. The New York Times also writes that negotiations between Samsung and Microsoft are not yet complete. You could also still end up with Google as the default search engine provider.
But the notion that Samsung, which makes hundreds of millions of smartphones each year with Google’s Android software, might even consider switching search engines sent shockwaves through Google and its parent company Alphabet.
The newspaper report and the stock’s plunge show just how much is at stake for Alphabet. The group faces the challenge of gaining competitiveness in the generative AI search market and thus defending its market share in search engines.
TechAint 