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The GOOGL stock price took a beating as Alphabet’s search monopoly on Samsung smartphone handsets come under threat.
On Monday, April 17, Alphabet Inc (NASDAQ: GOOGL) stock tanked by 2.66% ending the trading at $105.97 levels. The selling pressure comes amid the news that Samsung is planning for a major overhaul of the default search engine on its devices. Over the last week, rumor mills have been strong that tech giant Samsung is looking to replace Google search with Microsoft‘s Bing as its default search engine. This development comes at a time when OpenAI’s chatbot ChatGPT has stormed the tech world with its potential prowess.
Microsoft is currently having an edge in the AI market considering its significant investment in OpenAI. It is clear that the two tech giants shall initiate a long-going battle in the AI space. Google is also making a push into the AI space. Last month, Google released early access to the ChatGPT rival Bard.
Every year, Google is paying millions of dollars to smartphone manufacturers in order to stay as the default search on their devices. Of course, with this move, Google mints billions of dollars in advertising revenue.
As per the New York Times report last Sunday, Samsung and Google’s deal is up for renewal, which could be an estimated $3 billion in revenue for Google. As we know that Samsung is a major manufacturer of Android handsets. Thus, the news that Samsung is reportedly looking for a switch took Google employees by a major surprise.
Google’s Monopoly Under Threat as Samsung Paying Attention to Bing?
Over the last several years, Google has been grabbing a staggering 90% share of the search market. Due to this massive search dominance, Google is also in the middle of a strong battle with the US Department of Justice.
The DOJ has questioned several times regarding Google’s strategy of the pay-to-play model, while adding that paying to maintain as the default search engine has “harmful effects on competition and consumers”.
Over the last few years, Microsoft’s Bing has been languishing behind Google’s search, until recently, when the launch of OpenAI ChatGPT took the tech world by storm. The launch of Bing chat and ChatGPT together seems to provide a major wake-up to Google.
On the other hand, Samsung also enjoys an established partnership with Microsoft. Currently, all Samsung phones come pre-loaded with Microsoft Office apps.
It is not clear whether Microsoft is willing to pay Samsung as heavily as Google does. If so, this could lead to another bidding war between the two tech giants. On Monday, while the Alphabet stock entered a correction, Microsoft (NASDAQ: MSFT) stock registered 1% gains. The MSFT stock price is already up 20% year-to-date.