South Korea’s leading mobile phone brand Samsung is reportedly considering changing its default search engine from Google to Microsoft’s Bing for its lineup of smartphones, CNBC in a report said.
Alphabet shares slumped more than 2.5 percent Monday after The New York Times reported Samsung is considering ditching Google as the default search engine on its phones in favor of Microsoft’s Bing.
Google pays billions of dollars every year to phone manufacturers, including a reported $20 billion annually to Apple, to serve as the default search engine. In return, the search company reaps billions of dollars worth of advertising, which has long been a profit center for Google.
Samsung and Google’s deal is up for renewal soon, the Times reported, and is worth an estimated US$3 billion in revenue to Google. Samsung is a major Android manufacturer, and the news that Samsung would consider a switch reportedly surprised Google employees.
Google has more than a 90 percent share of the search market, according to a report published in StatCounter, and is in the middle of a contentious battle with the Department of Justice over its search dominance. The DOJ has fixated on Google’s apparent pay-to-play model, noting that paying to maintain default status has “harmful effects on competition and consumers”.
Microsoft’s Bing has languished for years behind Google. But Bing saw a surge of interest with the launch of its AI chatbot, which relies on OpenAI’s GPT model. CNBC previously reported on how the launch of both Bing Chat and OpenAI’s ChatGPT spurred Google into an all-hands “code red” response.
Samsung and Microsoft have an established partnership. Microsoft’s Office apps are preloaded on Samsung phones, for example, and Samsung phones have built-in software that makes it easier to connect them to Windows computers.
It isn’t clear if Microsoft would be willing to pay the same price that Google would. Microsoft relies far less on search and advertising and derives a significant amount of its revenue from cloud and enterprise solutions.
