Alphabet Shares Plummet Amid Concerns of Losing Search Market Dominance to AI Competitors
Alphabet, the parent company of Google, saw its stock plummet by over 3% in early Monday trading following a report that raised alarm bells about its leading search engine potentially losing its market share to AI-enabled competitors like Microsoft's Bing.
Recently, Google staff discovered that Samsung, a key partner, was considering replacing Google's search engine with Bing as the default option on its devices. This revelation triggered significant unease within Google, based on internal communications and documents.
In response to this increased competition, Google is reportedly developing a new AI-driven search engine, known as Project "Magi". Approximately 160 employees are said to be involved in the project, which aims to modify how results are displayed on Google Search and incorporate an AI chat feature to answer queries. The public unveiling of the project is scheduled for next month.
Lara Levin, a spokesperson for Google, stated that the company has been incorporating AI to enhance the quality of its results and introduce innovative search methods, such as last year's feature that allows users to search using a combination of images and text. Levin expressed confidence in the company’s responsible use of AI and their commitment to maintaining their high standards for delivering quality information.
Samsung has yet to comment on the situation.
Google's search engine has been the market leader for the past two decades. However, the rapid popularity of ChatGPT, an AI tool capable of producing persuasive written responses to user prompts, has seemingly put Google on the back foot for the first time in years.
Earlier this year, Google introduced Bard, its new AI-powered chatbot that rivals ChatGPT. Bard is designed to assist users with tasks such as drafting essays, planning events, and suggesting meal ideas based on available ingredients.
Meanwhile, Microsoft has teamed up with OpenAI, the creators of ChatGPT, to incorporate similar technology into Bing and other productivity tools. Other tech giants, including Meta, Baidu, and IBM, are also in the race to develop and implement AI-powered tools.
However, the adoption of this technology comes with risks, such as the potential to generate inaccurate or fabricated responses, particularly in the context of search engines, which are relied upon for precise and trustworthy information.
Google was criticized when Bard, during a demonstration, provided an incorrect answer to a question about a telescope. This incident resulted in Alphabet's shares plummeting 7.7%, erasing $100 billion from its market value. Bing's AI demonstration was also criticized for multiple inaccuracies.
In a recent interview, Sundar Pichai, CEO of Google and Alphabet, emphasized the necessity for companies to act responsibly when developing and releasing AI tools. According to Pichai, this involves obtaining user feedback and ensuring robust safety measures are in place before deploying more capable models. He also expressed his conviction that AI technology will profoundly impact businesses, professions, and society at large.