Shares of Google parent Alphabet were down more than 8 per cent on Wednesday, wiping billions of dollars off its market value, as Wall Street digested the potential damage to its search dominance and profits from a new artificial intelligence battle with Microsoft.
The knock to its stock price came as a result of a glitch in a Google AI demonstration, highlighting the challenges the company faces in bringing a new style of chat-based search to a mass market.
It came the day after Microsoft unveiled a new version of its Bing search engine that incorporated AI advances including summarising answers to search queries and generating emails and lists. In an interview with the Financial Times, Microsoft chief executive Satya Nadella made clear his company was prepared to use the new technology to drive down profits in search and that gross margin was “going to drop forever”.