Google-parent stock drops on fears it could lose search market share to AI-powered rivals

CNN
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Shares of Google parent Alphabet fell more than 3% in early trading Monday after a report raised concerns that its main search engine could lose market share to its search engine-based rivals. AI, notably Microsoft’s Bing.

Last month, Google employees learned that Samsung was considering making Bing the default search engine on its devices instead of Google’s search engine, causing “panic” within the company, according to a report from the New York Times, citing internal messages and documents. (CNN has not reviewed the material.)

In a bid to face increased competition, Google is reportedly developing a new AI-powered search engine called Project “Magi,” according to the Times. The company, which reportedly has around 160 people working on the project, aims to change the way results appear in Google search and will include an AI chat tool available to answer questions. The project is expected to be unveiled to the public next month, according to the report.

In a statement sent to CNN, Google spokesperson Lara Levin said the company has been using AI for years to “improve the quality of our results” and “offer entirely new search methods,” including with a feature rolled out last year that allows users. perform a search by combining images and words.

“We have done this in a responsible and useful way that maintains the high bar we have set for providing quality information,” Levin said. “Not every brainstorming or product idea necessarily leads to a launch, but as we’ve said before, we’re excited to introduce new AI-powered features to Search and will share more details soon. ”

Samsung did not immediately respond to a request for comment.

Google’s search engine has dominated the market for two decades. But the viral success of ChatGPT, which can generate compelling written responses to user prompts, seemed to put Google on the defensive for the first time in years.

In March, Google began opening access to Bard, its new AI chatbot tool that competes directly with ChatGPT and promises to help users write and edit essay drafts, plan a friend’s baby shower and get lunch ideas based on what’s in the fridge.

At an event in February, a Google executive also said the company would bring “the magic of generative AI” directly into its core search product and use artificial intelligence to pave the way for “the next frontier of our information products.

Microsoft, meanwhile, has invested and partnered with OpenAI, the company behind ChatGPT, to deploy similar technology in Bing and other productivity tools. Other tech companies, including Meta, Baidu and IBM, as well as a slew of startups, are racing to develop and deploy AI-based tools.

But tech companies run risks in adopting this technology, which is known for making mistakes and “wonderful” responses. This is especially true when it comes to search engines, a product that many use to find accurate and reliable information.

Google was called out after a Bard demo provided an inaccurate answer to a question about a telescope. Shares of Google parent Alphabet fell 7.7% that day, wiping $100 billion from its market value.

Microsoft’s Bing AI demo was also criticized for several errors, including an apparent inability to differentiate between types of vacuum cleaners and even made-up information about certain products.

In an interview with 60 Minutes broadcast on Sunday, Sundar Pichai, CEO of Google and Alphabet, stressed the need for companies to be “responsible every step of the way” when creating and releasing AI tools .

For Google, he said, that means allowing time for “user feedback” and ensuring the company “can develop more robust security layers before we build, before we deploy more capable models.” “.

He also expressed confidence that these AI tools will ultimately have broad impacts on businesses, professions and society.

“It’s going to impact every product of every company and that’s why I think it’s a very, very profound technology,” he said. “And so, we’re just in the early days.”