parent
Alphabet Inc
reportedly experienced a decline in its stock value following a report that
OpenAI
, the owner of
ChatGPT
, is working on a web search product to directly compete with Google.
According to The Information, OpenAI’s service would be partially powered by Microsoft Corp's Bing search engine. The report cited an unnamed source familiar with the matter. On Thursday, Alphabet’s stock dropped by as much as 3.8%, significantly underperforming the Nasdaq 100, which saw a 0.3% dip.
Alphabet has been grappling with concerns related to the risks posed by rival artificial intelligence services to its core business—Google search. The majority of Alphabet’s revenue comes from digital advertising sales through Google. Interestingly, despite Microsoft’s substantial investment in OpenAI and the integration of ChatGPT features into Bing last year, the company has struggled to gain significant market share.
Analysts don't see that big a threat to Google
According to a report in Bloomberg, Baird analyst Colin Sebastian characterised the risk to Alphabet from OpenAI’s search product as “modest.” He emphasized that creating a viable competitor won’t be straightforward for the startup.
In his research note, Sebastian highlighted the immense challenge of getting search right, noting that Google has successfully defended its position against numerous competitors over the years due to the quality of its search results. Even for OpenAI, surpassing Google’s performance could prove to be a formidable task.
While a Microsoft spokesperson declined to comment to The Information, an OpenAI spokesperson did not immediately provide a statement.
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