Alphabet Loses $57 Billion As Samsung Replaces Google Search with Microsoft BingChat

Alphabet, Google's parent company, witnessed a dramatic fall in stock prices as reports emerged about Samsung possibly replacing Google with Microsoft's Bing as the default search engine on its devices. Alphabet's stocks plummeted about 4%, shedding nearly $57 billion in market value.

Google currently earns about $3 billion annually from its contract with Samsung, as stated in a New York Times report. Google also has a similar $20 billion contract with Apple, which is up for renewal this year.

Microsoft Pips Google in AI Race With OpenAI Investment

Microsoft has surged ahead in the AI race, primarily due to its partnership with OpenAI and the integration of the AI technology behind ChatGPT. Google has dominated the search market with a share of over 80 percent for decades.

However, the rapid advancements in AI have left Wall Street concerned that Google may lag behind Microsoft in this fast-paced race.

In February, Alphabet lost $100 billion in market value following the botched unveiling of its chatbot, Bard. Google has reportedly returned to the drawing board, working on Magi, an AI-powered personalized search engine designed to compete with Bing and ChatGPT.

A Sign of Google's Impending Downfall?

The integration of AI technology like ChatGPT in search engines offers numerous benefits to users. Google's alarm at the possibility of Samsung choosing Microsoft Bing as its default browser is understandable, given that the company earns an estimated $3 billion in annual revenue from the Samsung contract.

If Samsung and Microsoft's deal materializes, not only would Google lose a $3 billion contract, but it would also risk losing a valuable partner. This shift could also affect other partnerships, such as the one with Apple, which has a $20 billion contract with Google that is up for renewal this year.

As Alphabet's stock fell to $104.90, nearly $50 billion was erased from its market capitalization. In contrast, Microsoft outperformed the broader market, witnessing a rise of 1%. Google reportedly plans to integrate AI capabilities into its search engine to remain competitive in the market.

Google's Failure to Capitalize on AI

While Google has been a forerunner in AI technology, it did not capitalize on the opportunity like OpenAI did with ChatGPT, leading to an AI goldrush that has outshined trends like NFTs and the Metaverse. Microsoft quickly seized the opportunity and signed a deal with OpenAI, launching BingChat, which rapidly gained internet popularity.

Google's future plans involve developing an all-new AI-powered search engine that provides a more personalized experience than its current service. This new search engine will also be upgraded with AI features to compete with AI-driven rivals like Bing. Both Alphabet and Samsung have yet to comment on the situation.

Wake Up Call for Google Investors

This development serves as a wake-up call for Google, as investors fear the company may have become a complacent monopolist in the search market. Google's lack of initiative towards making its primary Search business benefit from AI will see it continue losing out to the AI-powered rival Bing.

The time and capital required to make Google Search competitive could, if at all, also cause concern for the company.