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Alphabet Stock Drops as Samsung Considers Switching to Bing from Google Search

Alphabet Inc shares experienced a 4% decline on Monday due to a report suggesting that South Korea's Samsung Electronics is contemplating substituting Google with Microsoft-owned Bing as the default search engine on its devices.

Google building
Google building

Bing's Growing Threat to Google's Search Dominance

The New York Times report published over the weekend highlights the increasing challenges Google's $162-billion-a-year search engine business faced from Bing. Bing's prominence has grown recently after integrating the artificial intelligence technology behind ChatGPT.

Google's Potential Loss of Samsung Contract

According to internal messages cited in the report, Google's reaction to the potential threat was described as "panic" since the company makes an estimated $3 billion in annual revenue from the Samsung contract.

Apple Contract Renewal Looms for Google

As mentioned in the report, an additional $20 billion is connected to a similar Apple contract that is due for renewal this year.

Google's Response and Samsung's Silence

In response to Reuters, Google stated that it is working to introduce new AI-powered features to search without commenting on its relationship with Samsung. The South Korean consumer electronics giant did not respond to a request for comment.

Samsung building
Samsung building

Wall Street Fears Google Losing AI Race

Google has dominated the search market with over 80% share for decades. However, Wall Street is concerned that the company may fall behind Microsoft in the rapidly advancing AI race.

Alphabet's Market Cap Takes a Hit

Alphabet lost $100 billion in value on February 8th when its new chatbot, Bard, shared inaccurate information in a promotional video, and a company event failed to impress. On Monday, the stock dropped to $104.90, erasing nearly $50 billion from Alphabet's market capitalization, while Microsoft outperformed the broader market with a 1% rise.

Analyst Insights on Google's Search Monopoly

James Cordwell, an analyst at Atlantic Equities, said, "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." Cordwell also noted potential costs associated with making Google Search more competitive than AI-powered Bing could be a cause for concern.