- Alphabet wiped out $55 billion in market value on Monday after a report said competition was intensifying in the search market.
- According to the NYT, Samsung could replace Google with Microsoft’s Bing as the default search engine in its phones.
- Such a move would put about $3 billion in revenue at risk for Alphabet, which has long faced little competition.
Alphabet shares fell 4% on Monday, wiping out about $55 billion in market value after a report from the New York Times suggested that competition intensifies in the mobile search market.
The report says that Samsung is considering replacing Google as the default search engine on its line of devices in favor of Microsoft Bing Search, which could put around $3 billion in annual revenue at risk for Alphabet.
A similar contract between Alphabet and Applewhich represents approximately $20 billion in annual revenue for Alphabet, is due for renewal later this year.
Google employees were shocked when they learned in March that Samsung was considering replacing Google, and internal messages from Alphabet employees reviewed by The New York Times showed “panic” among staff.
Google faced increased competition in search for the first time in decades after Microsoft has integrated OpenAI’s ChatGPT into its Bing search results earlier this year. Google has long held a key monopoly in the search market, with a market share of around 90%.
And Alphabet is working hard to defend its market share, according to the report, with a team of more than 160 people working to integrate artificial intelligence features into its Google search product.
But that might not be enough if Samsung decides to set Bing as the default search engine on the hundreds of millions of devices it ships each year. While Google could still become the primary search engine on Samsung devices if a deal between Samsung and Microsoft is struck, it would require users to tweak phone settings themselves to make the switch.
Samsung has a long-standing relationship with Alphabet and Microsoft, as it pre-installs various apps from both companies on its devices, and negotiations between Samsung and Microsoft are still ongoing and could still end up with Google as the default provider, according to The report.
But the report underscores just how much at stake Alphabet is in to defend its market share in search and regain its competitiveness in the generative AI search market, in which ChatGPT is booming. A first showcase of Google’s response to ChatGPT, dubbed Bard, was a flop.