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Alphabet shares experienced a 3% decline after reports emerged suggesting that Samsung Electronics might consider swapping Google with Microsoft’s Bing as the default search engine on its devices. This development underlines the increasing challenges faced by Google’s search engine business, valued at $162 billion per year, as Bing garners more attention due to its integration with the AI technology behind ChatGPT.

Google is reportedly alarmed by the prospect of losing the Samsung contract, which generates an estimated annual revenue of $3 billion. The company also faces uncertainty with a similar Apple contract worth $20 billion, which is due for renewal this year.

Google has expressed its commitment to enhancing its Search engine with AI-powered features but has not commented on its relationship with Samsung, which has remained silent on the matter.

Despite dominating the search market with over 80% market share for many years, Google is now at risk of lagging behind Microsoft in the rapidly advancing AI sector.

Alphabet’s market capitalisation suffered a severe blow, losing almost $50 billion as its stock fell to $104.90 on Monday. In contrast, Microsoft shares rose by 1%.

Concerns are growing among investors that Google may have become too complacent in its position as a search market monopolist. Recent events have served as a stark reminder of the need for the company to stay ahead of the competition. Analysts also point to the potential costs associated with making Google Search more competitive with AI-enhanced Bing as a cause for concern.

On Monday, Alphabet shares experienced their worst day in over two months, closing 2.7% lower at $105.9. Meanwhile, Microsoft shares continued to rise by 1.6% as the AI battle between the two technology powerhouses intensifies. Samsung’s potential shift to Bing as the default search engine on its devices could put a contract valued at approximately $3 billion per year in danger.

Since ChatGPT’s launch in November, Microsoft shares have increased by 21%, whereas Alphabet shares have only risen by 10%. Experts from leading financial firms have recognized Microsoft as an early frontrunner in the generative AI space, with the potential to significantly outpace its competitors.