Microsoft’s investment in ChatGPT Parent could spell trouble for Google

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Microsoft is said to be trying to integrate artificial intelligence software into its search engine Bing, its Google rival. (Photo by Leon Neal/Getty Images) Getty Images

Google has been the undisputed leader among search engines for about 20 years.

However, Microsoft’s reported plans to integrate OpenAI’s AI technology into its search tools are raising questions about whether it could threaten Google’s dominance.

Based on our conversations, we think investors are increasingly asking whether this partnership [between Microsoft and OpenAI] could turn into a competitive hurdle for Google, KeyBanc analysts wrote in a research note on Monday.

Microsoft stock fell 0.4% in premarket trading Tuesday, while Alphabet fell 1.6%

Microsoft (ticker: MSFT) invested $1 billion in OpenAI, the developer of the social media phenomenon ChatGPT, a chatbot that can interact with humans conversationally in 2019 and is in talks to make another investment, according to the Wall Street Journal. OpenAI’s imaging tools are already being integrated with various Microsoft products, potentially a precedent for powering research responses with technology based on large language models, software trained on huge text databases.

Microsoft plans a $10 billion investment in OpenAI at a combined valuation of $29 billion, news site Semafor reported. Microsoft did not respond to a request for comment from Barrons on Tuesday.

While ChatGPT and other AI-powered chatbots can provide compelling answers to specific questions, they still have a long way to go to surpass Google’s usefulness. OpenAI CEO Sam Altman warned last month that ChatGPT can give a misleading impression of grandeur and shouldn’t be relied upon for factual questions. It also costs significantly more in terms of computing power to generate a response from a tool like ChatGPT than it does to do a Google search.

Just as Siri’s voice search was originally seen as a threat to Google, we expect the role of large language models to serve as a near-term ledge until Google unveils more of its work in artificial intelligence. Therefore, we expect Google’s annual developer event to be watched more closely this year, analysts at KeyBancs said.

Google’s parent company Alphabet (GOOGL) bought AI firm DeepMind for about $600 million in 2014. It is looking to invest at least $200 million in AI firm Cohere, The Wall Street Journal reported at the end of this year. ‘Last year.

Email Adam Clark at [email protected]

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