In the latest battle of the AI wars, on Monday rumours began swirling that Samsung might be dumping Google’s search engine for the new kid on the block, Microsoft’s ChatGPT enhanced Bing search.
Alphabet shares fell as much as 4% on the reports that Samsung was looking to pick sides in the Bard/ChatGPT race, which Google has been struggling to gain ground on since Bard’s embarrassing unveiling in February.
But the news of the impending breakup might be a blessing in disguise.
Google has been in the sights of multiple Department of Justice antitrust suits since the Trump administration, which have accused Google of acting illegally in paying billions of dollars to smartphone makers, including Samsung, to be set as the default search engine for their customers.
If true, the loss of Samsung’s contract would represent a $3 billion annual revenue hole for the company as Samsung represents the largest market share, approximately 20%, of smartphone sales after Apple.
Given Samsung’s significant share in the smartphone market, the loss of the agreement could water down the case that Google is exerting monopolistic control over the online search market and strengthen Google’s defence enough to see the case tossed out.
Earlier this month, lawyers representing Google pleaded with the judge for dismissal on the grounds that “there is nothing wrong or nefarious” about making it easier for people to be exposed to Google’s products, even if that is achieved by paying to be the default provider.
The loss of Samsung would also deal a major blow to Google’s brand, potentially leading other customers to follow suit and switch to Bing if they feel public sentiment is shifting.
The timing of this news is unfortunate for Google as a similar contract with Apple, valued at almost seven times that of Samsung’s ($20 billion) is due for renewal by the end of the year.
And the blows just keep coming for Google.
In a separate ongoing suit, the first filed during the Biden administration, the Department of Justice is seeking to force Google to divest parts of its online advertising business in which Google dominates both sides of transaction, buying and selling ad products to customers on its proprietary exchange platform.
The case is expected to go to trial in September.
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