Alphabet shares dropped more than 3.7 per cent on Monday after reports that Samsung, the world’s biggest maker of smartphones, is considering plans to replace Google with Microsoft’s Bing as the default search engine on its devices.
The world's largest provider of search and video advertisements, which has slumped about 17 per cent in the past year, settled about 3 per cent lower on Monday at $105.97 a share.
By contrast, shares of Microsoft closed up about 1 per cent at $288.80 a share.
Alphabet’s employees were shocked when they learnt that the South Korean company was considering replacing Google with Bing, The New York Times reported.
Google’s reaction to the threat was “panic,” as the company makes $3 billion annually from the Samsung contract.
Another $20 billion is tied to a similar contract with iPhone manufacturer Apple that will be up for renewal this year, the report added.
Launched in 2009, Bing trailed behind Google in users’ uptake for years, but it gained popularity in February when Microsoft announced that it was adding generative artificial intelligence technology to it.
The company said its new AI-powered Bing search engine aims to deliver better search, more complete answers, a new chat experience and the ability to generate content.
Bing now runs on a next-generation large language model built by Microsoft-backed OpenAI that the company described as more powerful than ChatGPT.
Search engine Google has more than a 90 per cent share of the global search industry market, according to StatCounter.
However, it is battling with a series of lawsuits.
In January, the US Department of Justice and eight states filed an antitrust lawsuit against Google, alleging it monopolised the country's $279 billion digital advertising market to stifle competition and boost its profit.
This was the second lawsuit filed by the DoJ against Google in just over two years.
The earlier lawsuit, filed in October 2020 under the Trump administration, accused Google of “unlawfully maintaining the monopolies in the market for online searches” and stifling competition in the process.
Earlier this year, Google also launched its new conversational AI service, Bard.
Bard focuses on creating innovative ways to engage with information, from language and images to videos and audio. However, in February, the company lost $100 billion in market value after Bard made an error in a promotional video.
Samsung and Microsoft did not respond immediately to The National’s request for comments.
Both companies are already working together on several initiatives.
In August 2019, they partnered to facilitate an exchange of apps and features that will let smartphones work more like personal computers.
Samsung phones also come with built-in software that makes it simpler to connect them to Microsoft’s Windows computers.
