Alphabet Inc shares fell nearly four percent on Monday after a report that South Korea’s Samsung Electronics was considering replacing Google with Microsoft-owned Bing as the default search engine on its devices.
The report, published by the New York Times over the weekend, underscores the growing challenges that Google’s $162bn-a-year search engine business face from Bing – a minor player that has risen in prominence recently after the integration of the artificial intelligence tech behind ChatGPT.
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Google’s reaction to the threat was “panic” as the company earns an estimated $3bn in annual revenue from the Samsung contract, the report said, citing internal messages.
Another $20bn is tied to a similar Apple contract that will be up for renewal this year, the report added.
In a response to Reuters, Google said it was working to bring new AI-powered features to search without commenting on its association with Samsung. The South Korean consumer electronics major did not respond to a Reuters request for comment.
Google has for decades dominated the search market with a share of over 80 percent, but Wall Street fears the company could be falling behind Microsoft in a fast-moving artificial intelligence (AI) race.
Parent firm Alphabet lost $100bn in value on February 8 after its new chatbot, Bard, shared inaccurate information in a promotional video and a company event failed to dazzle.
On Monday, the stock fell to $104.90 and erased nearly $50bn from Alphabet’s market capitalization. Microsoft, meanwhile, outperformed the broader market with a rise of one percent.
“Investors worry Google has become a lazy monopolist in search, and the developments of the last couple of months have served as a wake-up call,” Atlantic Equities analyst James Cordwell said.
Cordwell added that the potential costs tied to making Google Search more competitive than AI-powered Bing could also be a cause of concern.
The New York Times report said Google was racing to build an all-new AI-powered search engine that would offer a more personalised experience than its current service, which is also set to be upgraded with AI features.