Google-parent shares fall on fears it could lose search market share to AI-powered rivals | Business

Shares in Google parent Alphabet fell more than 3% in early trading on Monday after a report sparked concerns that its main search engine could lose market share to AI-powered rivals, including 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 one report from the New York Times, citing internal messages and documents. ( has not reviewed the material.)

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

In a statement sent to, Google spokeswoman Lara Levin said the company has been using AI for years to “improve the quality of our results” and “offer completely new ways to search,” including with a feature launched in last year that allows users to search by combining images and words.

“We’ve done this in a responsible and helpful way that maintains the high standard we set for providing quality information,” Levin said. “Not every idea or product idea leads to a launch, but as we’ve said before, we’re excited to bring 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, appeared to put Google on the defensive for the first time in years.

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

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

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

But tech companies face risks in adopting this technology, which is known to make mistakes and “fudge” answers. 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’s parent company, Alphabet, fell 7.7% on the day, wiping $100 billion off its market value.

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

In an interview with 60 Minutes that was issued on Sunday, Google and Alphabet CEO Sundar Pichai emphasized the need for companies to “be accountable every step of the way” as they build and release AI tools.

For Google, he said, that means allowing time for “user feedback” and making sure the company “can develop stronger layers of security before we build, before we roll out more capable models.”

He also expressed his belief that these AI tools will have a broad impact on businesses, professions and society.

“This is going to affect every product of every company, and so I think it’s a very, very deep technology,” he said. “And so, we’re in the early days.”

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