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Search Will Never Be the Same

Wall Street Journal technology writer Joanna Stern says I Tried Microsoft’s New AI-Powered Bing. Search Will Never Be the Same.

Microsoft’s new Bing and Edge became available in a limited preview Tuesday. You have to sign up on bing.com for the preview wait list, and once you are in, you’ll have to use the Edge browser (available for Windows and MacOS). Microsoft plans to bring it to other web browsers over time. 

It’s far too early to call a winner in this AI search race. But after seeing the new Bing in action, I can confidently say this: A big change is coming to how we get information and how we interact with our computers.

That is a free link if you care to read. The video is even more interesting.

Can Bing and OpenAI Challenge Google? Microsoft's Satya Nadella Weighs In.

Key Quotes

• "Bing with AI is going to completely change what people can expect from search."
• "We are grounded in the fact that Google dominates this space. I feel like a new race is starting with a complete new platform technology. I am excited for the users to have choice finally, and a real competitive race.
• “All I need is a few more users, and someone else that I’m competing has to keep all of their users and all of their gross margin.” 

Google Follows Microsoft in Unveiling AI Search Features

Just one day later, the WSJ reports Alphabet unit’s artificial intelligence rivalry with Microsoft heats up. 

Please consider Google Follows Microsoft in Unveiling AI Search Features

Google unveiled new artificial intelligence-powered search and map features, capping a flurry of competing announcements by the search giant and rival Microsoft Corp. as they race to bring a new generation of the technology to users.

The back-to-back announcements from two of the tech industry’s fiercest competitors are the latest signs of how companies are scrambling to roll out tools that use a type of artificial intelligence that can generate content—from haikus to computer code—and capitalize on a wave of renewed excitement about the potential of AI among businesses and consumers.

“Google has a lot more to lose than gain from rushing Gen-AI out the door,” wrote Colin Sebastian, a senior research analyst at Baird Equity Research. “Microsoft is taking a big leap, integrating OpenAI technology with Bing, a smart move for a search engine with limited share—how could Bing not gain search share?”

Others are jumping into the fray as well. China’s Baidu Inc. is developing an AI-powered chatbot similar to ChatGPT called “Ernie bot,” which it plans to launch next month.

The race is forcing Google—by far the most widely used search engine—into an unusual position of playing catch-up to a company whose search engine is an also-ran in traffic terms.

Google Weekly Chart

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Google weekly chart courtesy of StockCharts.com

It's a long way down if Microsoft takes market share from Google. 

More accurately, it's a long way down regardless. 

Alphabet’s Profit Falls 34% Amid Ads Slowdown

On February 2, the New York Times reported Alphabet’s Profit Falls 34% Amid Ads Slowdown

Alphabet, Google’s parent company, has settled into a period of stalled growth as economic uncertainty reverberates across Silicon Valley. Gone are the pandemic boom times, when the internet giant’s profit and employee head count soared.

On Thursday, the company posted its fourth consecutive decline in profit as it grapples with a slowdown in digital advertising. Net income plummeted 34 percent to $13.6 billion, falling short of Wall Street expectations of $15.3 billion, according to data compiled by FactSet.

Competition is Good

Stock pricing aside, competition is good. There is no reason to bust up either if these corporations. 

The consumer is the winner in these battles.

But the Biden administration and the EU see things differently.

Justice Department Accuses Google of Monopolizing Ad Market

Politico reports the Justice Department finally unveiled its vaunted antitrust lawsuit seeking to break up Google’s advertising business, a case that could reshape Silicon Valley and define President Joe Biden’s legacy.

The EU Will Lag on AI for the Same Reason it Lost on Phones and EVs

On February 4, I commented The EU Will Lag on AI for the Same Reason it Lost on Phones and EVs

Microsoft alone will spend over three times on AI what Germany as a country will spend. Factor in Google, Amazon, and the US defense industry.

The EU now has lawsuits against Google, Amazon, and Microsoft. The US leads because the EU would bust up any company before it got big enough to lead on anything.

And heaven forbid any European company get big enough to achieve anything. The EU would bust them all up in the name of competition.

Unfortunately, the protectionist Biden administration sees things more and more like the EU. 

Regarding the Stock Market 

Nice one, ht @Hedgeye pic.twitter.com/XsA15KX2kj

— Ronnie Stoeferle (@RonStoeferle) February 3, 2023

(Click on image to enlarge)

Facebook chart courtesy of StockCharts.Com, annotations by Mish

On February 3 I cautioned Bull Markets and Bear Market Rallies End on Good News

Back-to-back, we have had good news on Facebook and on jobs. What's Ahead?

The Fed and Lags

If you have been net long for this rally, congrats! But think about where things are headed as the Fed Commits to More Rate Hikes.

Also consider my January 30 post How Long is the Lag Between Fed Rate Hikes and Real World Activity?

I strongly suspect that any good news is now mostly behind us. 

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