Shares of Alphabet, Google’s parent company, slumped nearly 4% leading to a loss of $55 billion on Monday following a report that Samsung Electronics was considering replacing Google with Microsoft-owned Bing as the default search engine on its devices.
The research, published over the weekend by the New York Times, highlights the mounting problems Google’s $162 billion-a-year search engine company faces from Bing – a tiny competitor that has recently gained in importance following the integration of the artificial intelligence technology underlying ChatGPT.
According to internal correspondence, Google’s reaction to the threat was “panic,” as the business generates an estimated $3 billion in annual revenue from the Samsung contract.
Reuters’ inquiries for comment were not immediately responded to by Alphabet or Samsung.
Google has controlled the search business for decades, with a market share of more than 80%, but Wall Street is concerned that the company may be lagging behind Microsoft in a fast-moving AI battle.
Alphabet’s parent business lost $100 billion in value on Feb. 8 after its new chatbot, Bard, released incorrect information in a promotional video and a company event fell flat.
The stock plummeted to $104.90 on Monday, erasing over $50 billion from Alphabet’s market capitalization. Meanwhile, Microsoft outpaced the market with a 1% increase.
“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,” Atlantic Equities analyst James Cordwell said.
Cordwell also mentioned that the potential costs associated with making Google Search more competitive than AI-powered Bing could be a source of concern.
According to the New York Times, Google is rushing to develop a whole new AI-powered search engine that will provide a more personalized experience than its present service, which is also slated to be improved with AI elements.
