(Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)
SOPA Images/LightRocket via Getty Images
Key takeaways:
Earlier this week, Microsoft announced its upgrade to search engine Bing and browser Edge, which now include OpenAI’s ChatGPT technology
Google has been left scrambling to respond, showing a rare chink in the armor of the leading search engine
The markets have upgraded Microsoft stock while Google spiraled down 8% after a factual error in an advert for their competitor AI product, Bard
Microsoft’s newly revamped Bing search engine and Edge browser have arrived, with the Big Tech leviathan heralding the duo as the “AI copilot for the web”.
At a Microsoft HQ event on Tuesday the first tranche of Microsoft’s AI capabilities was unveiled, promising a revolution in how we search. Google’s panicked responses, including an inaccurate advert for their competitor, Bard, and a disappointing live event, have underwhelmed investors so far.
The rapid succession of announcements from the two has simultaneously shifted the conversation around the top dog in tech and introduced the first big change in the industry for years. Here’s what went down.
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What has Microsoft launched?
On Tuesday, Microsoft held a press event in Seattle to announce that its pimped-out search engine Bing and Edge browser were ready to go, that day, with AI technology. CEO Satya Nadella was on top form: “It’s a new day in search, it’s a new paradigm for search, rapid innovation is going to come,” were his words on the day.
OpenAI CEO, Sam Altman, was onstage with Nadella for the big reveal. Microsoft recently announced a $src0bn multi-year partnership with the company that created ChatGPT, which passed the src00m users threshold in under two months.
He confirmed that some of OpenAI’s GPT-3.5 language model was integrated into Bing to give it the powerful AI capabilities Microsoft wants, to win over users. Microsoft’s CMO, Yusuf Mehdi, was keen to mention Microsoft’s version for Bing and Edge is “much more powerful” than the standalone chatbot which has launched the AI tech wars.
Key new features include AI-summarized search results, an interactive chat where you can refine your search and a ‘creative spark’ that suggests AI-generated ideas for your query. Users are only treated to a few sample searches before they’re prompted to join the waitlist.
Sneakily, you can jump the queue by setting Bing as the default browser on your PC and downloading the Bing app. (Pretty wild considering the competition fines Microsoft has gotten in the past, but hey, for once they’re the underdogs here).
What’s Google’s response been?
Once ChatGPT launched, Google quickly issued an internal ‘code red’, diverted entire teams to work on AI and this week announced the launch of its AI rival, Bard. From the outside, it looked suspiciously like the lead search engine company was scrambling around for a response.
All eyes were on Google’s next announcement, but it fell short. At a YouTube live stream event in Paris on Wednesday, Google execs regurgitated the issued statement around Bard. Google CEO Sundar Puchai was nowhere to be seen. Many felt the event was underwhelming, especially compared to what Microsoft had put on.
This would have been a shoulder-shrugging moment were it not for the basic error in Bard’s promo video for Twitter. Users quickly pointed out that its claim that the James Webb telescope was the first satellite to take pictures of a planet outside the Earth’s solar system, is wrong.
We’re sure Microsoft is gleefully chuckling to itself.
Is Microsoft and Google stock up?
Microsoft stock climbed as high as $273 on Wednesday but has since held steady at around $266. Five different Wall Street brokers upgraded Microsoft stock after their event, though some warned of a potential bubble around AI tech.
The rare misstep from Google’s Twitter advert was a costly one. Alphabet, Google’s parent company’s stock plummeted by as much as 9%, or $src00bn, during Wednesday trading as investors feared the reigning search engine champion might lose its crown.
There’s still a lot of uncertainty about how different companies will use AI technology and who will emerge on top, but as it stands, Microsoft has the edge – and the stock market’s attention.
What’s going on with search engines right now?
When it comes to search engines, Google is the undisputed leader. As of December 2022, it commanded nearly 85% of the market.
But the cracks are starting to show. 2022 was the first time Google and Meta’s advertising marketing share dropped below 50% in eight years. The US justice department is also suing Google for asserting too much dominance in the digital advertising space.
What of this? Well, the sharks are circling. TikTok released an advertisement recently encouraging users to search on the platform. Back in July Google’s senior vice president, Prabhakar Raghavan, said almost 40% of Gen Zs use TikTok and Instagram for searching over traditional search engines.
Microsoft has seen all of this from the sidelines and timed its moment. It’s clear that the computing giant plans to take on Google with this new, game-changing technology.
Could Bing overtake Google?
The chances of Microsoft dethroning Google in the volume of searches seemed like a complete fantasy just a few weeks ago. But here we all are, talking about Bing for the first time in years.
“From now on, the [gross margin] of search is going to drop forever,” Nadella said. If that proves to be true, Google faces an overhaul of its entire business model.
The basic error from Google’s Bard hints Microsoft forced Google’s hand more than they’d like to admit – and demonstrates how high the stakes are with AI. Will Bard still be impressive and powerful? Yes, but Google will have to work harder now to regain users’ and Wall Street’s trust while Microsoft steams ahead.
The popularity of OpenAI’s ChatGPT is another string to Microsoft’s bow. Despite the frequent crashing and only being trained on information up to 202src, it’s amassed a huge following and generated daily headlines since its launch.
“I’ve never ever felt this liberated in terms of opportunity in the days ahead,” Nadella said. This new frontier could be Microsoft’s defining moment – and a shifting of the Big Tech world order.
The bottom line
The AI wars are here. Not only have they arrived with a bang, but the players in this tussle have the deepest pockets of just about any company on the planet. Neither of them are going to give up without a fight, and with tech that is changing so rapidly, there’s always the possibility that other competitors will enter.
As an investor, it’s going to be mighty tough to stay on top of this and pick the winners.
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