Alphabet shares fall on report Samsung may dump Google Search for Bing

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Google's reaction to the threat was "panic" as the company earns an estimated $3 billion in annual revenue from the Samsung contract, the report said, citing internal messages. Another $20 billion is tied to a similar Apple contract that will be up for renewal this year, the report added.

Google has for decades dominated the search market with a share of over 80%, but Wall Street fears the company could be falling behind Microsoft in a fast-moving AI race. Parent firm Alphabet lost $100 billion in value on Feb. 8 after its new chatbot, Bard, shared inaccurate information in a promotional video and a company event failed to dazzle.

Google Stock: Apple iPhone Deal Eyed

Some Google stock analysts also have wondered aloud whether an internet search deal between Apple (AAPL) and Google could be impacted if Microsoft's Bing gains market share. That deal is worth $17 billion to $20 billion, reports say.

Google is the default search engine on iPhones. Google pays Apple billions of dollars annually in so-called "traffic acquisition costs," or TAC. Apple could pressure Google to pay more, said a Barclays report. Microsoft is the biggest investor in OpenAI. Microsoft also is integrating OpenAI's chatbot technology into Office productivity software.

Google Shares Up For The Year

Further, generative AI technology already is finding applications in a number of areas. They include marketing, advertising, drug development, legal contracts, video gaming, customer support and digital art.

As of Friday's market close, GOOGL stock had advanced 23% this year. By comparison, the S&P 500 had gained 8%. Further, the Nasdaq was up nearly 17%.

Earnings for GOOGL stock are due April 25. Meanwhile, Microsoft reports earnings the same day. MSFT stock has gained 19% in 2023.

Microsoft’s shares saw growth by 1% amidst the downfall of Alphabet

If the deal between Samsung and Microsoft goes through, it would mean Google loses not only a $3 billion contract but also a valuable partner. In fact, the deal could also influence other players such as Apple, with which Google has a $20 billion contract that is up for renewal this year.

In response to Reuters, Google commented that it is working on bringing AI capabilities to its search engine without commenting anything on its association with Samsung. Samsung also did not respond to this news. Alphabet lost $100 billion on February 8 after reports of its chatbot Bard, which shared inaccurate information in a promotional video and failed the company event.

Conclusion

On Monday, the stock fell to $104.90 and erased nearly $50 billion from Alphabet's market capitalization. Microsoft, meanwhile, outperformed the broader market with a rise of 1%. "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 added the potential costs tied to making Google Search more competitive than AI-powered Bing could also be a cause of concern.

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