Alphabet Inc., the parent company of Google, experienced a drop in share prices following reports that OpenAI, the owner of ChatGPT, is developing a web search product that could compete with Google. According to an unidentified source familiar with the matter, OpenAI’s search service would be powered in part by Microsoft Corp.’s Bing search engine.
This news raised concerns about the potential risks that rival artificial intelligence services pose to Google’s search business, which primarily generates revenue through digital advertising. Despite Microsoft’s significant investment in OpenAI and the integration of ChatGPT features into Bing, the tech giant has struggled to gain market share in the search engine space.
Colin Sebastian, an analyst at Baird, downplayed the risk to Alphabet from OpenAI’s potential search product, stating that creating a viable competitor in the search engine market is no easy feat. Sebastian noted that Google has consistently fended off competitors over the years with the quality of its search results. He also mentioned that alternative search engines would likely need to outperform Google to effectively shift user behavior, which could prove challenging even for OpenAI.
Responding to the reports, Alphabet saw its shares drop as much as 3.8% on Thursday, significantly underperforming the Nasdaq 100, which experienced a mere 0.3% dip.
OpenAI declined to comment on the matter when approached by Bloomberg News.
While OpenAI’s potential entry into the search engine market has caused some concern for Alphabet, analysts believe that Google’s dominant position and the difficulty of delivering superior search results will pose significant challenges for any competitor, including OpenAI. As the situation develops, market observers will be closely watching the progress and impact of OpenAI’s web search product.
References:
– [BNN Bloomberg](https://www.bnnbloomberg.ca/alphabet-falls-after-report-openai-developing-search-product-1.1627267)
– [Bloomberg News](https://www.bloomberg.com/news/articles/2022-10-06/alphabet-drops-after-report-openai-developing-search-product)
