Alphabet Inc lost $100 billion in market value on Wednesday after its new chatbot shared incorrect information in a promotional video and failed to shine at a company event. Feeding concerns that it is losing ground to rival Google parent Microsoft Corp.
Alphabet shares fell as much as 9% in regular trading, with volume nearly triple the 50-day moving average. They pared losses after hours and were fairly flat. The stock lost 40% of its value last year but is up 15% since the start of this year, excluding Wednesday’s losses.
Reuters first identified a flaw in Google’s ad for chatbot Bird, which debuted on Monday. About a satellite taking the first image of a planet outside Earth’s solar system.
Google is hot on its heels after OpenAI, a startup Microsoft is backing with nearly $10 billion.
Google’s live-streamed presentation Wednesday morning did not include details on how and when it will integrate Bird into its core search function. A day ago, Microsoft held an event to reveal to the public a version of its Bing search that already includes ChatGPT functionality.
Byrd’s flaw was discovered just before the presentation by Google, based in Mountain View, California.
“While Google has been a leader in AI innovation for the past several years. they seem to have fallen asleep in applying this technology to their search products.” Said Gil Luria, senior software analyst at D.A. Davidson.
Microsoft shares rose nearly 3% on Wednesday and were flat in post-market trading.
Alphabet posted a short GIF video of the bird via Twitter, promising that it would help simplify complex matters. But it instead provided an incorrect answer.
Byrd responded with several answers, including one suggesting that JWST was used to take the first images of a planet or exoplanet outside Earth’s solar system. The first image of the exoplanet was taken by the European Southern Observatory’s Very Large Telescope (VLT) in 2004, confirmed by NASA.
The search and advertising giant is moving quickly to keep up with OpenAI and rivals. Reportedly bringing in founders Sergey Brin and Larry Page to accelerate its efforts.
“People are starting to question whether Microsoft is now going to be a strong competitor against Google’s real bread-and-butter business.” said King Leap, chief strategist at Baker Avenue Wealth Management, which owns Alphabet and Microsoft shares.
Lipp cautioned, however, that concerns about Alphabet may be overblown, saying:
The new ChatGPT software has sparked excitement among tech companies in recent weeks. After hundreds of thousands of job cuts and executive pledges to return to so-called moonshot projects.
The appeal of AI-powered search is that it can spit out results in plain language instead of lists of links.
Which can make browsing faster and more efficient. It’s not yet clear what impact this could have on targeted advertising, the backbone of search engines like Google.
Chatbot AI systems carry risks for corporations because of inherent biases in their algorithms that can skew results. Sexualize images or even plagiarize, as customers testing the service have discovered. Microsoft, for example, released a chatbot on Twitter in 2016 that quickly began generating racist content before being shut down. And an AI used by news site CNET has actually been found to produce false or plagiarized stories.
At the time of writing, the Bird ad has been viewed over a million times on Twitter.
