• by Laurie Sullivan  @lauriesullivan, April 17, 2023

Interest by Samsung in replacing Google Search with Microsoft Bing reportedly put a match under the feet of Google developers. Google, the Alphabet company, will reportedly release new AI-powered search tools next month under the code name Magi.

The features, first reported by The New York Times, will initially only become available in the U.S.

The plans are part of Google’s effort to squash the threat by Microsoft’s Bing chatbot and Samsung’s possible replacement of Google Search on its mobile phones.

The deal is worth an estimated $3 billion in annual revenue to Google, which has a similar deal with Apple. Both are valued at about $20 billion in annual revenue,  the NYT reports.

Search revenue is constant, even in inflationary times, despite overall market-share declines. 

Search secured a record $84.4 billion in revenues in 2022 making up 40.2% of total internet ad revenues.

While search revenue grew 7.8% year-over-year (YoY) in 2022, its overall market share continues to decrease as buying shifts to digital video and display, according to the Internet Advertising Bureau (IAB).

The IAB notes in a report published last week that innovation in artificial intelligence (AI) programs such as ChatGPT are changing the utility of search, as Microsoft’s Bing and Alphabet’s Google continue to invest significant resources in search and related products.

It’s not surprising that Google is working on a new AI-search experience and tools to support it.

Samsung shipped 261 million smartphones in 2022, according to IDC data, all running on Google’s Android software.

For decades, Google has dominated the search market with a share of more than 80%, but Wall Street fears the company could be falling behind Microsoft in a fast-moving AI race.  The company has been largely complacent about search because of little competition.

Microsoft and its multibillion-dollar investment in OpenAI ChatGPT integration into the Bing search engine now poses a threat to Google’s $162 billion business, but it is unclear when advertises and marketers will see an entirely new A.I.-powered search engine. 

Some believe Google is falling behind in AI. Alphabet, Google’s parent, lost $100 billion in value on February 8 after Bard, its new chatbot, shared inaccurate information in a promotional video and a company event failed to impress, according to Reuters, which was first to point out an error in Google's advertisement for the chatbot at the time.

Samsung has an established partnerships with Microsoft and Google. Its devices come preloaded with a library of apps from Microsoft such as OneDrive, and Google Maps.