This week’s announcement by Microsoft (MSFT -0.20%) that it will be incorporating Open AI’s ground-breaking artificial intelligence (AI) chatbot into its Bing search engine was a significant shot across the bow. Alphabet (GOOG -0.63%) (GOOGL -0.46%), the parent company of Google and the market leader in search, responded by announcing the launch of Bard, a competing chatbot, which would be available to customers in the upcoming months. To help produce incredibly human-like textual results that are the next stage in search engine technology, both AI technologies are trained on billions upon billions of data inputs.
Chinese firms Baidu and Alibaba are also competitors; both of them have announced the creation of AI chatbots. However, the focus of this piece will be on the American rivals and what these new chatbots may entail for these two American businesses.
Microsoft: A wise investment and pioneering effort
For those who don’t know, Bing is Microsoft’s version of the second-most popular search engine in the world. Bing, however, only has an estimated 3% market share of the whole search engine industry overall, with almost no market share on mobile devices and less than 10% on PCs. With an estimated 93% market share, Google essentially controls the industry.
With its latest integration with ChatGPT, the sophisticated language learning chatbot from a start-up called OpenAI, Microsoft hopes to reverse this unfair competition. Microsoft has revealed a connection where Bing and Microsoft Edge (its redesigned internet browser) users may conduct inquiries to ChatGPT in addition to conventional searches. Microsoft has made a massive $10 billion investment in the firm. ChatGPT became the fastest-growing internet service in history after acquiring 100 million users barely two months after its start.
Microsoft’s stock prices have increased by almost 5% as a result of this news, with CEO Satya Nadella declaring that “the race begins today” in reference to the company’s new rivalry with Google.
Alphabet: Previous acquisition and long-standing users
While Microsoft has struck first, Alphabet has made it obvious that it won’t be defeated easily. Over 4 billion people regularly use Google Search, along with other free Google services like Gmail, Google Drive, Google Calendar, and Google Pay. Microsoft will find it very challenging to change these customer behaviors, especially if Google’s Bard chatbot can deliver outcomes that are comparable to ChatGPT.
The top AI research organization in the world is DeepMind, which creates tools for a variety of uses, including entertainment (such as its AlphaGo product, which defeated expert Go players) and scientifically ground-breaking (such as AlphaFold), which uses AI to predict over 200 million protein structures for the biosciences market).
This provides it a great starting point as it tries to compete with Bing’s new features, from my outsider perspective.
So, who will triumph?
Microsoft is attempting to regain some market dominance in search for a very straightforward reason: money. The most lucrative industry in history, Google Search generated nearly $42 billion in high-margin sales just in the past quarter. Microsoft could significantly boost its $83 billion in operating earnings even if it simply steals a small portion of the search industry away from Google. On the other hand, Google Search accounts for the majority of Alphabet’s $75 billion in operational earnings annually, so the company will exert tremendous effort to protect its market dominance.
Who will prevail in the competition between the redesigned search engine and the AI chatbot is yet unknown. Alphabet/Google, however, shouldn’t be discounted due to its substantial market share and DeepMind’s proficiency in AI. Due to the long-standing relationships that customers have developed with Alphabet and its prompt response to Microsoft’s new collaboration, I have a strong feeling that Alphabet will prevail. It will be interesting to watch how this struggle for search engine dominance develops over the next five to ten years, regardless of the outcome.