The new Internet search wars that broke out between Google and Microsoft this week will not be the last. The competitive base is shifting, and not just because Microsoft has a shiny new technology at their disposal in the impressive OpenAI artificial language intelligence.
Google has won the recent search wars for one very simple reason. Competitors — including Microsoft’s Bing — have been unable to come up with anything new or distinctive to counteract Google’s strong branding and distribution advantages. Even the chat-based AI behind the latest Bing upgrade is unlikely to break this pattern. Google was embarrassingly caught on the wrong foot, but should still be able to keep up with Microsoft within weeks. If this were a repeat of the old search wars, Google would undoubtedly win.
This time, however, Microsoft has four main weapons at its disposal, making the outcome more uncertain.
The first is economical. The high cost of “reading” web pages using natural language processing makes search engines that provide full-text responses to queries expensive to operate. Speaking to the Financial Times this week, Microsoft CEO Satya Nadella made it clear he was ready to slash search advertising profits by pointing an ax at the mainstay of Google’s business.
Microsoft’s second weapon is familiar: its ubiquity on PCs. This week’s fight was fought as a repeat of the long-standing – and one-sided – rivalry between Google and Bing. But Microsoft’s real advantage is rather its Edge browser, which has garnered a lot of praise in tech circles. This week it presented its new text generation and search technologies embedded in the browser. Imagine you press a key and Edge instantly breaks the long document on your screen into five bullet points.
Speaking to the FT, Nadella said he will target Windows users first in the battle with Google. Edge has an 11 percent share of the desktop browser market — small but certainly better than Bing’s 3 percent share of the search business and a beachhead into the all-important lives of millions of information workers for whom Microsoft is a fixture.
A third Microsoft weapon is the edge it has been able to gain with generative AI. OpenAI’s launch of ChatGPT late last year brought the technology into the public eye. In reality, however, this race started more than three years ago, when Microsoft made its first $1 billion investment in OpenAI. At that point, it began both building the computing infrastructure to support OpenAI’s sophisticated large language models and developing ways to embed the technology into its services.
Google has a lot of experience with AI. But Microsoft’s advantage in adopting the latest major language systems has at least given it a chance to set a benchmark in terms of quality and cost.
The fourth Microsoft weapon is that it is deeply entrenched among many business customers. Along with crawling the web, this means it can draw on its customers’ own data to work with its large language models and customize output for individual companies. Microsoft’s broader presence in enterprise software also means it can embed generative AI into other applications: no matter what application you’re working in, the software could eventually start pulling in useful information and making suggestions about what to do next .
This highlights an important point of the new Internet search wars: They will change the way people think about Internet search. Success will increasingly come from helping people find and apply information in the most effective way, whatever they do.
Old habits are hard to break, and many people will turn to a search box for years to come. But as new and more convenient ways of finding and manipulating information creep into their lives, those visits are likely to become less frequent.
That’s one of the reasons Nadella and other Microsoft executives tried this week to redesign the web search business. They dubbed it the world’s largest software market — a business worth more than $200 billion a year that Microsoft rarely plays in but is central to the lives of its users.
Google’s grip on Internet search will not be relaxed easily. But the tremors running through the stock price this week indicated that the disruptive potential of generative AI on Wall Street is starting to wane. None of the incumbents – including Microsoft when it’s not using the technology to its own advantage – are truly secure.