Google falls behind Microsoft in the AI race, and it could spell disaster

The last few weeks haven’t turned out the way Google hoped. After it released the AI-powered Gemini for image creation, the tool was met with severe criticism from all quarters due to its inaccuracy and inherent bias. Subsequently, Google disabled image creation on Gemini.

In an email to the employees, Google’s CEO, Sundar Pichai, wrote,

I want to address the recent issues with problematic text and image responses in the Gemini app. I know that some of its responses have offended our users and shown bias — to be clear, that’s completely unacceptable and we got it wrong.

This led to growing concerns about Google sustaining the long-held top spot in searches performed on the web. It forms a significant share of Google’s revenue.

In an interview with Bloomberg, Tom Graff, CEO of Facet said,

Alphabet falling behind in AI is a clear and present danger. The downside is so significant for Alphabet that there’s really no way to price it in.

Google’s stocks fall, Microsoft’s rise

As it turns out, the whole fiasco didn’t go down well with the investors and resulted in massive setbacks for Alphabet, the parent company, in the stock market. Alphabet stocks fell over 5% last week, wiping nearly $100 billion off the market value.

In the same period, Microsoft’s stock witnessed a steady rise. The company made several enhancements to its native AI-based chatbot, Copilot, including allowing users to upload documents, which were well received by the users.

If another company develops an AI-based tool or search engine that could outperform Google, the California-based tech giant will be in deep trouble.

It’s not going to happen any time soon, given Google’s hold over the market, but it’s a wake-up call, nonetheless!

To put things into perspective, Microsoft’s native search engine, Bing, has a market share of 3.31% as opposed to Google’s 91.62% as per Statscounter. Similarly, in the browser ecosystem, Google Chrome commands 65.31% of the market, while Microsoft Edge lags behind at 5.07% according to Statcounter.

These figures also highlight another critical aspect. Google has a lot to lose, while Microsoft stands to gain from every calculated and effectively enforced measure!

This AI race between Microsoft and Google is turning out to be more competitive than anyone thought. One setback and Google suffered a bloodbath in the stock market. More losses in the race could trigger massive sell-offs, and the management would be forced to make critical decisions!

Who do you think will be the more dominant player in the coming days, Microsoft or Google? Share your thoughts in the comments section.