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With Bing and ChatGPT, Google faces first real competition in 20 years

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  • Microsoft has invested $1 billion in OpenAI, which created ChatGPT, and plans to integrate ChatGPT with Bing.
  • Bing hasn’t come close to hitting Google’s search dominance since it launched in 2009.
  • Many have said that Google Search has stagnated and competition from Bing and ChatGPT could change that.

ChatGPT, the generative AI app that went megaviral in late 2022, has been touted as the savior — or destroyer — of everything from academic rigor to the entire marketing profession.

Also on that list: search engines. While Google has been the undisputed leader in Internet search, many were quick to say that ChatGPT could derail its reign. While there is valid skepticism that ChatGPT is an immediate threat to Google, that could soon change.

Information reports that Microsoft and ChatGPT creator OpenAI are working to integrate the technology into Bing, Microsoft’s perpetually overlooked search site. Microsoft invested $1 billion in OpenAI in 2019 and it looks like that investment is paying dividends.

Bing lost out to Google search for over a decade, but with the integration of ChatGPT, Bing may offer the first compelling reason why people might want to switch from Google. The big questions are: how much can ChatGPT improve Bing? And will it force Google to change its own search engine in response?

Microsoft gets shot in the arm

News that Bing is looking to integrate ChatGPT prompted investment bank DA Davidson to begin coverage on Microsoft, with a target price 17% higher than the current price of $222.34.

“We believe that incorporating ChatGPT capabilities into Bing could provide Microsoft with a unique opportunity to topple Google’s search dominance,” said analyst Gil Luria.

Luria added that while Bing is a distant second behind Google, incorporating ChatGPT capabilities allows Bing to grow at much higher rates for both the search and advertising business. While Luria takes into account Google’s own forays into generative AI, he believes those projects haven’t taken the same steps as ChatGPT.

In addition to using ChatGPT advancements to improve Bing, Microsoft also wins because OpenAI runs on its Azure cloud.

“In the near term, we believe the unprecedented activity on OpenAI’s ChatGPT is translating into incremental volumes on Azure,” said Luria. “We expect these levels to increase significantly with the introduction of GPT 4.0 later this year and the many product branches that will link to OpenAI through APIs.”

DA Davidson estimates that OpenAI has annual expenses of $250 million to $1 billion, with most of it spent on Azure.

As ChatGPT gained popularity, some Google executives told Insider’s Tom Dotan that the underlying technology that powers ChatGPT — large language models — has inherent limitations, often gives wrong answers, and is expensive to run.

However, reports from the New York Times said the company declared a “code red” surrounding ChatGPT and management held meetings in hopes of pushing for more generative AI-like products.

Can ChatGPT deliver? And will Google be forced to improve?

Google’s search product has come under scrutiny in recent years. The Atlantic criticized Google Search as “not what it used to be”, Fast Company said it is getting worse, and former Yahoo CEO and Google employee Marissa Mayer said the quality of Google Search is directly related to a drop in the quality of the sites she must look for. in, by Search Engine Journal. In August, TechCrunch reported that Google released ways to improve the rankings of high-quality sites.

But ChatGPT has a long way to go before it totally overthrows a legacy product, although some users have said that using ChatGPT resulted in “scaryly impressive” results. The ChatGPT integration with Bing may even fail. As Morgan Stanley said in an analyst note, to truly disrupt something, a competitor needs to offer solutions that are ten times better than the next best option. The new Bing powered by ChatGPT has a lot of space to fill.

But if Bing’s integration with ChatGPT takes off with web users, it could spur Google to respond and roll out its own natural language search functionality.

Google is no stranger to the language models that ChatGPT uses. The exact model ChatGPT runs on was developed by ex-Googlers. The internet giant has its own language model called LaMDA, short for Language Model for Dialogue Applications. The model briefly went viral after a Google engineer claimed it was sentient. (Was not.)

But Google also needs to think about the impact that integrating natural language models would have on its business as a whole. Google relies on advertising and frequently inserts sponsored links into search results. The jury is still out on whether a natural language model supports this.

Still, for the first time since it launched in 2009, Bing, the perpetual second-choice search engine that once offered to pay people just to use it, may finally have a chance.

And thanks to an investment in OpenAI and a gamble in the burgeoning generative AI industry, Microsoft may finally force Google to compete if it wants to maintain market dominance.