Shares of Alphabet plunge $100 billion as Google's bot debut fails to captivate
As Wall Street considered the possible harm to Alphabet's search dominance and revenues from a fresh artificial intelligence conflict with Microsoft, its shares closed almost 8% lower on Wednesday, wiping billions off its market worth.
A bug in a Google AI presentation caused a drop in the company's stock price, underscoring the difficulties the business will face in introducing a novel form of chat-based search to the general public.
It was released the day after Microsoft introduced a new version of its Bing search engine that featured advancements in artificial intelligence (AI), including summarising search results and producing emails and lists. Microsoft CEO Satya Nadella made it plain in an interview with the Financial Times that his company was ready to exploit the new technology to reduce search earnings and that gross margin was "going to shrink forever."
"Such margin exists in search, and for us, it is incremental. For Google, it's not; they must protect everything, he continued, describing the rivalry as "asymmetric."
In an effort to gain ground on rival ChatGPT, Google announced on Monday that it would introduce its own chatbot, Bard. The company has not yet specified when the service will be made available to the general public, though.
The first web video demo of the device contained a factual inaccuracy that experts pointed out was made by Bard. When asked about recent discoveries made by the James Webb Space Telescope, Bard responded in an animation that Google posted by claiming that it "took the very first photographs of a planet outside of our own solar system."
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Astronomers argued that this was false, bringing attention to a bigger problem with massive language models, an AI-powered search technology that may confidently propagate false information. A possible cause of the issue, according to one scientist, could be AI misinterpreting "ambiguous NASA news releases that underplayed prior events."
The bug brought to light a frequent problem with so-called generative AI systems like Bard, which repeat data without truly "understanding" it and instead infer conclusions based on probabilities. Similar difficulties were acknowledged by Microsoft with their chat-based service.
In contrast to the significant changes the company had promised would occur within "weeks," Google Senior Vice-President Prabhakar Raghavan unveiled new search tools during an event in Paris on Wednesday. New image-based search and interactive 3D representations of some locations, like London and Los Angeles, were among the modifications.
Since the recent release of ChatGPT, which delivers text answers to hard inquiries without the use of a typical search engine, Google has been rushing to catch up with integrating AI technologies into its consumer offerings.
Only the second quarterly decline in Google's history, its advertising revenue fell by 4% in the final quarter of last year, according to the company.