Alphabet, the parent company of Google, experienced a 4% drop in premarket trading on Monday following a report by the New York Times that Samsung Electronics was considering replacing Google with Microsoft-owned Bing as the default search engine on its devices.
The report highlighted Bing’s rise in prominence recently after the integration of the artificial intelligence technology behind ChatGPT. Google earns an estimated $3 billion annually from the Samsung contract, and another $20 billion is tied to a similar Apple contract that will be up for renewal this year.
Google has dominated the search market with a share of over 80% for decades, but Wall Street fears that the company could be falling behind Microsoft in a fast-moving AI race. Google’s reaction to the threat was reported as “panic.”
On February 8, parent firm Alphabet lost $100 billion in value after its new chatbot, Bard, shared inaccurate information in a promotional video, and a company event failed to dazzle investors. Since then, Google has been racing to build an all-new AI-powered search engine that would offer a more personalized experience than its current service, which is also set to be upgraded with AI features.
Investors worry that Google has become a lazy monopolist in search, and the potential costs tied to making Google Search more competitive than AI-powered Bing could also be a cause for concern. Meanwhile, Microsoft outperformed the broader market with a rise of 1.9% on Monday.
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