Shares of Alphabet Inc (Google) dropped by up to 4% on Monday after reports surfaced that Samsung Electronics was contemplating replacing Google with Microsoft-owned Bing as the default search engine on its devices.
The report, released by the New York Times over the weekend, highlights the increasing competition Google’s $162-billion-a-year search engine business is facing from Bing, which has gained prominence recently due to its integration of artificial intelligence technology, including that behind ChatGPT.
According to the report, Google’s response to the threat of losing the Samsung contract was characterized as “panic,” as the company reportedly generated around $3 billion in annual revenue from that partnership. Additionally, there is another $20 billion at stake with a similar contract with Apple that is up for renewal this year.
When asked for a comment, Google stated that it is actively working on incorporating new AI-powered features into its Search but did not provide any specific details about its association with Samsung. On the other hand, Samsung has not responded to requests for comments on the matter.
For many years, Google has held a commanding share of over 80% in the search market. However, concerns on Wall Street are growing that the company may be lagging behind Microsoft in the rapidly evolving field of artificial intelligence (AI).
The parent company of Google, Alphabet, suffered a loss of $100 billion in market value on February 8th, following the release of a promotional video featuring its new chatbot, Bard, which shared inaccurate information. Additionally, a company event failed to impress investors.
As a result, on Monday, Alphabet’s stock dropped to $104.90, causing nearly $50 billion to be wiped off its market capitalization. Meanwhile, Microsoft’s stock outperformed the broader market, experiencing a rise of 1%.
This wouldn’t be the first time Samsung has considered switching to Bing. In 2010, certain models of the Galaxy S II were shipped with Bing as the default search engine, and changing it back to Google was not straightforward.
At that time, Bing was a relatively new and ambitious competitor aiming to challenge Google’s dominant market share. However, despite its initial efforts, Microsoft’s Bing has struggled to gain significant traction over the years, and it may feel like that ship has sailed for them in terms of competing with Google.