AP

Investors’ query: Can Google answer Microsoft’s AI threat?

Feb 8, 2023, 2:13 PM | Updated: 2:33 pm

SAN FRANCISCO (AP) — Google, a company built on finding quick answers to people’s questions, suddenly finds itself grappling for a response to a potential threat to its internet empire — a form of artificial intelligence that long-time rival Microsoft is now deploying to attack its dominant search engine.

Microsoft’s assault combined with concerns about Google’s ability to ward it off hammered its corporate parent, Alphabet Inc., whose stock price plunged nearly 8% Wednesday in a selloff that wiped out about $100 billion in shareholder wealth.

It marked the steepest one-day decline since October when an Alphabet earnings report disclosed a slowdown in digital ad revenue that rattled investors. Those concerns have escalated since another report released last week revealed Google’s ad sales during the holiday-season quarter fell from the same time in the previous year.

Wednesday’s downturn came after Google elaborated on its plans for a chatbot dubbed “Bard ” during an uninspiring presentation that included inaccurate information about space exploration. It contrasted with a much more polished and well-reviewed showcase of Microsoft’s plans to incorporate an already popular chatbot, ChatGPT, into its Bing search engine — long a distant second to Google’s de facto gateway to the internet.

“It’s not like this is the end of the world for Google and Microsoft is going to eat its lunch in search,” said CFRA analyst Angelo Zino said. “But ChatGPT is showing there is possible threat and that is causing a lot of fear.”

Google has been focusing on artificial intelligence for the past six years, but has been cautions about how it uses the technology in its search engine that holds a roughly 90% share of the internet market — in part because it’s counted on as a go-to source for reliable information.

Although ChatGPT has attracted millions of users since its release late last year by OpenAI, it still makes glaring mistakes that would be mocked if they showed up in Google’s search results. But Microsoft’s Bing search engine has such a small sliver of the market that it can afford to experiment with what is still a largely untested technology.

“Google has had to take a more measured approach, but Microsoft really has nothing to lose so why not use ChatGPT in search?” said Edward Jones analyst David Heger.

And Microsoft’s increasingly reliance on ChatGPT — a technology that prompted the software maker to pour billions of dollars into OpenAI — may not be Google’s only worry. Baidu, the leading search engine in China, is rolling out a chatbot called Ernie and, on Wednesday, veteran Google executive Clay Bavor announced he is leaving the company after 18 years working on a variety of major projects to launch an AI startup with former Salesforce co-CEO Bret Taylor.

The AI challenges are confronting Google at a time it’s also gearing up for an antitrust trial triggered by a U.S. Justice Department lawsuit aimed at its search engine. The trial, scheduled to begin in September, is considered to be the biggest antitrust case targeting a technology company since the department took aim at Microsoft’s dominance in personal computer software more than 20 years ago.

While Microsoft became distracted battling antitrust regulators, Google seized on the opportunity to make huge inroads in search and become a tech powerhouse.

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Investors’ query: Can Google answer Microsoft’s AI threat?