Alphabet shares tumbled upon the initial announcement that Google might no longer have exclusivity.
As the news broke that Samsung is thinking about replacing Google with the Bing search engine from Microsoft as a default on all its devices, Alphabet’s shares initially fell by more than 4 percent in premarket trading.
The electronics company from South Korea has not set the choice in stone but is considering the option.
According to a report in the Globe and Mail, just the fact that Samsung is even thinking of choosing the Bing search engine as a default instead of Google only further places the spotlight on rising challenges Google is facing from this new competition. Until recently, Alphabet’s $162 billion per year search business hasn’t seen too much challenge from Microsoft’s offering.
That said, this small player has been receiving strong attention lately due to the integration of artificial intelligence technology from ChatGPT. Suddenly, Google is facing a rival, and that rival has teeth.
The initial reaction to Samsung’s Bing search engine announcement at Google was “panic”.
The report stated that there was “panic” at Google, when the news broke that Samsung was considering the competition. Google brings in about $3 billion per year from its contract with Samsung.
Moreover, the company has another similar contract with Apple worth $20 billion, and that contract is up later in 2023.
Google has long been the leader in the search market, holding a share greater than 80 percent. However, with Microsoft’s rapid moves in AI, investment experts are wondering if Google is slipping behind.
Alphabet attempted to unveil its own chatbot called Bard in February, to detrimental results. When the company shared inaccurate information from the bot in a promotional video, it lost $100 billion in value.
Now, Google faces a serious challenge to try to make its own product more competitive than the AI-powered Bing search engine. Some investors are considering this to be concerning and are keeping a close watch on the moves each of those companies make. The announcement that Samsung is considering the rival was a painful blow to a company that had become comfortable with a near monopoly.