Alphabet Inc. saw a significant drop in stock value on Monday, with its shares sliding by as much as 4%. The decline wiped out approximately $55 billion of the company’s market value.
This followed a report by The New York Times that indicated increased competition in the mobile search market, with Samsung contemplating replacing Google as the default search engine for its devices with Microsoft’s Bing Search.
News About Nigeria understands that this move could put around $3 billion in annual revenue at risk for Alphabet. Also, a similar contract between Alphabet and Apple, which is worth around $20 billion in annual revenue, is due for renewal later this year.
According to The New York Times report, Google employees were surprised when they learned in March that Samsung was considering replacing them, and internal messages of Alphabet employees reviewed by the paper showed “panic” among staff.
For the first time in decades, Google is facing increased competition in search, with Microsoft incorporating OpenAI’s ChatGPT into its Bing search results earlier this year. Google has long held an essential monopoly on the search market, commanding a market share of about 90%.
Alphabet is working hard to defend its market share, with a team of more than 160 people working to incorporate artificial intelligence features into its Google search product, according to the report.
However, that may not be enough if Samsung decides to set Bing as the default search engine across the hundreds of millions of devices it ships each year.
While Google could still be made the primary search engine on Samsung devices if a deal between Samsung and Microsoft goes through, it would require users to change the phone settings on their own to make the change.
Samsung has a long-standing relationship with both Alphabet and Microsoft, as it pre-installs various apps from both companies on its devices. Negotiations between Samsung and Microsoft are still ongoing and could still end up with Google as its default provider, according to the report.
The report highlights just how much is at stake for Alphabet to defend its market share in search and regain its competitiveness in the generative AI search market, at which ChatGPT is thriving. An initial showcase of Google’s answer to ChatGPT, dubbed Bard, was a flop.
As Alphabet navigates these uncertain times, it remains to be seen whether the company will be able to defend its position as the dominant player in the search market or whether it will need to adjust its strategy to keep up with the changing landscape of search technology.