How Microsoft’s ChatGPT is Challenging Google’s Dominance in Search

It’s happening! The AI wars officially began. Google announced Bard. Microsoft front-ran that event with their very own presentation of ChatGPT-powered Bing search. And we get to watch from the front row in this Clash of Titans.

And to me, it’s so interesting how people think about this because three months ago, nobody would have even considered Bing to be a competitor to Google. But if you ask them today, 80% of the answers will be that Bing, with ChatGPT, is going to beat Google in the short term here.

But a major part of the story is not obvious, and was certainly not communicated in any of the product presentations that happened here recently. And that’s why I dug up a bunch of information that Google will certainly not be communicating anytime soon here.

However, Google’s product presentation was not well received, and they barely showed off their new product, Bard. In contrast, Microsoft’s presentation not only showed off more, but also started rolling out almost immediately. Despite their slow market share decline, Google still dominates the search engine market. But here are 7 things Google does not want you to know about the AI Wars:

1. Bing has been slowly gaining market share over the last four years.

So, let’s start off by looking into some data – concretely, search engine adoption across the past 12 years. Because the story most people believe is that Google is the number one player and completely dominates that market.

And while that is mostly true, most people will not know what happened with Bing over the course of the last four years.

This graph on Twitter clearly shows that in 2019, the cards were laid out just as most people think they were: Google, 88% market share; Bing, 5.3% market share; and then Yahoo, 2.7%, and the other ones below 1%. Well, no real competition there, right? But as we move beyond 2018, it starts becoming very interesting because Bing starts gaining a lot of market share here, proportionally to their previous numbers.

And while 8.9% may not seem crazy, it’s more than double what they had in 2018. As we’ll discover later in this article, there are several contributing factors that led to this point. But just realize that moving into this moment, the AI Wars that just started here live within the context of Google dominating long term.

However, over the past four years, Bing has been slowly but surely catching up. And for the first time in 20 years, we’re getting somewhat of a competitor for the king of internet search, Google here.

2. Microsoft’s presentation was better received

And that brings me to the next point because the presentation they delivered was, well, pretty average. Most people would share this sentiment. Don’t get me wrong, I love seeing all the progress they presented and the various projects they work on. The Google Map stuff was pretty impressive, although from a consumer standpoint, it felt just like an incremental upgrade.

But the core thing that everybody was looking forward to was their Bard Chatbot based on the lambda language model, and they barely showed it off. Of the few examples they gave, one actually turned out to be false.

Now, discussions are happening on Twitter about whether it was actually false, but at the end of the day, the facts might not matter. The damage was already done.

3. Google’s stock price dropped over 10%

If you look at the stock price’s reaction to the event, it went down over 10% from its highs, and with their valuation, that’s over a hundred billion dollars erased.

In contrast, Microsoft’s presentation didn’t just show off a whole lot more; it also started rolling out pretty much immediately. I know a bunch of people that got access to bing powered by ChatGPT less than 24 hours after its release. With Bard, it seemed more like an announcement that okay, we’re looking at this, we’re working on it, and maybe in a few months, we’re gonna release something. That’s what it felt like, and they didn’t communicate anything concrete.

4. Microsoft is acting like a startup

Both of these are massive corporations, but Microsoft is kind of acting like a startup here. As Microsoft’s core business is not search and selling advertisements, they can pull moves like spontaneously front-running Google’s event that has been announced, despite being a somewhat similarly sized company.

5. Google’s founders stepped down in 2019

Additionally, considering the fact that Google’s founders stepped down in 2019 and are no longer involved in running the company, one can start to worry for Google. For the first time ever, they have been slowly losing market share to Bing, although these are single-digit percentage numbers. It’s going to be a whole lot harder to change the direction of the ship that Google represents at this point.

However, it’s not all bad. Google made it very clear during the presentation that they see AI as the new computing platform, and that their efforts go way beyond just upgrading the search engine. Microsoft also announced other apps like Teams integrating ChatGPT, which is a fantastic use case. Summarizing lengthy meetings is one of the most convenient use cases one can think of.

At the end of the day, even though Google’s presentation was not that impressive, they did show an extremely wide variety of products that they’re working on in combination with AI. Especially during the last segment on art restoration and all the art-related projects they’re working on, it was truly impressive. It was just like, whoa, they do that too? And they do that too? And what the heck? I had no idea that even existed.

6. The AI Wars are about more than just search

Now, let’s move on to the next fact that Google didn’t tell you about AI search. A search for Google, as you might know, is a big deal, but most people don’t realize how big of a deal it is for Google. Search is not just at the very core of their DNA, and ‘googling’ something means searching for something on the internet, right? But it’s also at the very core of their balance sheet.

In 2022, advertisements made up 79% of Google’s revenue, and where does most of that advertisement revenue come from? You guessed it – from the search engine. It’s not just Google. YouTube actually is the second biggest search engine on planet Earth, and they own both of them. The core business model there is selling advertisements on an auction-based system, where both creators, Google, and eventually advertisers went to.

But that whole business model is based upon the fact that they are the search engine that is being used. And as I showed you, for the longest time, this was an undisputed fact. Or, things are changing. And with the release of ChatGPT.

7.  Microsoft Vs Google

I want you to consider one more fact that is crucial in understanding this rivalry between Microsoft and Google. It’s the fact that ChatGPT has been in this public research phase (aka free version open to anybody on planet Earth) since December 1st. And you might have seen this, but the rate at which they did this is absolutely unbelievable.

Look, in two months, they reached 100 million users. Just in comparison, for Instagram and TikTok, it took 30 months, and TikTok was the record holder with nine. And in those two months, over 100 million users input their search queries. And as you might know, a lot of these AI models are only as good as the data you feed into them. And Microsoft, with ChatGPT, has an incredible advantage here that Google currently does not have.

That is over two months of usage data during peak hype at an unprecedented user rate. And whatever Google does, they will not be able to replicate the fact that ChatGPT simply reached peak hype in terms of what can be popular across the world and the internet. I mean, at this point, even my grandparents have heard about this new AI doing crazy things. And all this usage data and the fine-tuned guardrails that can now be set up because they know where to set them up is something no amount of money is going to be able to replicate.

And the best part is the story does not end there. We’re just talking about two competitors here. But two days ago, Baidu, China’s biggest search, actually announced their own AI-powered chatbot.

So that’s another thing to look forward to. On this channel, we’ll be covering all of it. And I expect to see way more from Google in May at their developer conference that happens every year.

Conclusion

In conclusion, the AI Wars have begun, and the competition is fierce. Bing is gaining market share, and Microsoft is acting like a startup, taking risks that Google might not have the freedom to take. Google sees AI as the new computing platform, and their efforts go beyond just upgrading the search engine. Although Google’s presentation of Bard was not as impressive as Microsoft’s presentation of ChatGPT-powered Bing, they are still working on a wide range of AI-related products. It remains to be seen who will come out on top in the AI Wars.

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