Alphabet Inc (GOOGL.O) shares tumbled as much as 4% on Monday after reports that Samsung Electronics (005930. KS) considered replacing Google with Microsoft-owned Bing as its default search engine.
The New York Times’ weekend piece highlights Bing’s rising threat to Google’s $162-billion-a-year search engine industry after integrating ChatGPT’s artificial intelligence expertise. According to internal correspondence, Google’s response to the threat was “panic” because the Samsung contract generated $3 billion in income.
The source added that a similar Apple (AAPL.O) contract up for renewal this year is worth $20 billion. Google told Reuters it was adding AI-powered search tools without mentioning Samsung. The South Korean consumer electronics giant declined to comment.
For decades, Google has held over 80% of the search industry, but Wall Street worries it may lag behind Microsoft in the AI race.
Alphabet lost $100 billion on Feb. 8 after its new chatbot, Bard, misled viewers in a promotional video and a company event underwhelmed.
Alphabet’s market cap dropped roughly $50 billion on Monday as the stock plunged to $104.90. Microsoft rose 1%, outperforming the market.
“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 warned that making Google Search more competitive than AI-powered Bing could be costly. Alphabet fell 2.7% to $105.9 on Monday.