What happened
As trading winds down for the week, Alphabet (GOOG +0.08%)(GOOGL +0.14%) stock is going out with a bang, capping a four-day run of constantly rising stock prices with another 1% gain (as of 11:25 a.m. ET).
And Alphabet can thank Samsung (SSNL.F +55.02%) for that.
NASDAQ: GOOG
Key Data Points
So what
One month ago -- almost to the day -- Alphabet stock lost $50 billion in a single day when The New York Times reported that key smartphone partner Samsung was considering removing Alphabet's Google as the default search engine on its phones. Enamored of ChatGPT and the potential of artificial intelligence to improve the functionality of search, Samsung was reportedly considering replacing Google with the new ChatGPT-powered Bing from Microsoft (MSFT 0.50%). If that happened, Google could conceivably have seen its share of the global search market shrink, unless Samsung users affirmatively chose to download Google as their preferred search app -- a prospect that send Alphabet execs into a "panic," as the NYT reported.
But now it seems Alphabet has dodged this bullet.
This morning, The Wall Street Journal reported that Samsung has "suspended an internal review that had explored replacing Google with Bing on its mobile devices" and decided to stick with Google for the long term.
Now what
But Alphabet's not entirely out of the woods yet. The NYT noted last month that the company has a contract renewal with Apple (AAPL +0.33%) on the horizon. Apple might be even more motivated than Samsung to twist the knife into a rival whose Android operating system is its major competitor in smartphones globally. But for the moment, at least, you have to figure that Alphabet (and its shareholders) are breathing a sigh of relief.
WSJ also points out that Alphabet is paying Apple somewhere between $8 billion and $12 billion per year -- apparently significantly more than it pays Samsung -- to keep Google as its default search engine. That essentially free revenue stream might be a second reason Apple wants to stick with Google.
One thing does worry me, though: Why exactly did Samsung suddenly change its mind -- and might the reason be that, quietly, behind the scenes, Alphabet offered to pay Samsung something closer to the fee it pays Apple, to keep Google on its smartphones? No one's confirmed such a move on Alphabet's part, mind you -- but "panicked" companies sometimes do strange things, and I do wonder.
If Alphabet begins to lose pricing power in its negotiations with partners, simply because Microsoft decided to offer a better product in competition, that wouldn't be good news for Alphabet. It would, in fact, be a reason for Alphabet stock to go down, not up.
