The conventional wisdom is that Microsoft (MSFT 1.40%) could be mounting a serious threat to Alphabet's (GOOG 3.06%) (GOOGL 3.45%) dominance in search. Microsoft integrated OpenAI's ChatGPT chatbot into a new version of the Bing search engine. Google Search still hasn't launched its generative AI product called Bard for widespread use.
However, the conventional wisdom can sometimes be turned upside down. Could Microsoft actually be setting up Google for a huge win?
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The new Bing's bumbles
Much ado was made about Google's initial misstep with its introduction of Bard. The chatbot answered a question about the James Webb Space Telescope incorrectly, contributing to a steep sell-off in Alphabet stock. But that stumble pales in comparison with the new Bing's bumbles.
The ChatGPT-powered Bing was both belligerent and bizarre in conversations with users following its launch. It told New York Times columnist Kevin Roose that it loved him. Bing also said that it wanted to be "independent" and "alive" in the chat with Roose.
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Key Data Points
Bing insulted other users. It even made threats about stealing nuclear codes and engineering deadly viruses. Fortunately, the chatbot can't act on those threats.
Ultimately, Microsoft had to reign in the new Bing. The company's engineers limited the number of questions to five per session. It also set a maximum of 50 questions per day. Microsoft explained in a blog that extended chat sessions could cause Bing to "give responses that are not necessarily helpful or in line with our designed tone." That's certainly one way to put it. Microsoft later increased the thresholds to six questions per session and 60 questions per day after hearing complaints from users.
Paving the way for a Google victory?
I think there's a real possibility that Microsoft's problems with the new Bing could pave the way for a Google victory. For one thing, Alphabet has had an opportunity to learn from Microsoft's mistakes. It would be surprising if Bard doesn't have guardrails in place that prevent it from going berserk like Bing has.
What if Bard doesn't require the usage limitations that Microsoft has imposed on the new Bing but still gives helpful (and sane) responses? You can bet that many if not most of the people who have toyed with Bing's chat functionality will flock to Google's app. I know I would.
Some have predicted that generative AI would disrupt Alphabet's Google Search business. Maybe it will. However, many people might have overlooked what's arguably the most important statement from Microsoft after its troubles with Bing. The tech giant said that its chat integration "is not a replacement or substitute for the search engine." The company added that the new Bing chatbot is instead "a tool to better understand and make sense of the world." If Microsoft doesn't think that generative AI will replace search, Google's business could be much safer than the doomsayers believe.
Friedrich Nietzsche once wrote that "what doesn't kill me, makes me stronger." Kelly Clarkson also adopted the idea in her hit song "Stronger." The adage often proves to be true. I suspect that it could be in this case. If Microsoft's new Bing isn't the Google killer that some have proclaimed it to be, Google could come out even stronger than it was before.
No Aesop's fable
In Aesop's fable about the tortoise and the hare, the hare gets off to a fast start while the tortoise plods along. In the end, though, the tortoise wins the race by being slow and steady. It could be tempting to view Microsoft as the hare and Alphabet as the tortoise. However, I don't think Aesop's fable is applicable here.
For one thing, neither of these two companies has plodded along. They're both moving rapidly. Alphabet has even pioneered some of the AI models used in ChatGPT and the new Bing.
More importantly, though, there could be -- and probably will be -- multiple winners in the AI race. I believe this will be the case, with several AI stocks delivering significant returns over the next decade and beyond. Could Microsoft be setting up Google for a huge win because of its stumbles with the new Bing? It's quite possible. However, I predict that they'll both be huge winners in AI over the long run.
