Feb 09, 2023
Microsoft’s Bing Becomes a Real Challenger to Google With ChatGPT
Ryunsu Sung
Two days ago, Microsoft announced the new Bing search experience at its headquarters in Redmond.
The key feature of the new Bing is that it integrates a ChatGPT-like conversational experience into search. Microsoft has not disclosed exactly which OpenAI model (the startup behind ChatGPT) is embedded in Bing, but it did say that it is a more advanced model than GPT-3.5, which powers ChatGPT.
A major strength of Bing is that, unlike ChatGPT, whose knowledge is capped at 2021, it is aware of current events. It pulls in newly created information from across the web to generate answers (which, of course, is what any search engine should do).
This is a screenshot of Bing’s response when asked whether LeBron James, the famous American basketball player, has broken the NBA scoring record. Unlike ChatGPT, it gathers up-to-date information and provides an appropriate answer, and as you can see under “Learn more” below, it also clearly cites its sources.
By collecting information in real time and presenting search results in a conversational format, Bing showcases a clear technological leap over traditional search engines.
For the billions of queries that are going unanswered, we have seen new attempts to try and address the problem. As you all know there are vertical search attempts: Amazon has done a better job for shopping, YouTube’s great for video, Reddit is a great place to get advice. The benefits of Search are well-known: it’s fast, it’s timely, and there’s a great business model.
And then, more recently, there has been another vector; more disruptive ideas like leveraging AI to answer questions directly and to generate content. These are amazing as well, and they show what’s possible.
But what if you could get the two to come together? Not only would you get two things in one, but we think you could actually solve the problems with each and you could get to something that is really 1+1=3. We have done that with the new Bing.
Yusuf Mehdi, Microsoft’s Corporate Vice President for Search, said, “We’ve seen a variety of new attempts to solve the problem of billions of queries going unanswered,” pointing to vertical search solutions — Amazon for shopping, YouTube for video, Reddit for advice — as examples, and went on to praise the strengths of search (it’s fast, relevant, and built on a powerful business model).
He added that more recently, there have been attempts to solve the problem in a completely different way, for example by using AI like ChatGPT to answer questions and generate content, calling these efforts “amazing” and saying they “show what’s possible.”
“But what if you could bring search and AI together? We believe that integrating search and AI doesn’t just give you two solutions at once; it can actually fix the shortcomings of each and create a situation where 1+1=3. We have achieved that with the new Bing,” he announced.
Microsoft clearly sees the new Bing as a very big deal.
The launch of the new Bing not only justifies this special event, it also reflects the company-wide attention it is receiving — to the point that CEO Satya Nadella is framing this as a seismic shift from the PC/server era to the mobile/cloud era. This stance signals Microsoft’s intention to emerge as a direct rival to Google in search.
We think there are two things that are emerging: one are these conversational intelligent agents. I think these are things we’re going to have everywhere we go. All computer interaction is going to be mediated with an agent helping you. In fact, we’re going to have this notion of a co-pilot that’s going to be there across every application canvas, inside of an operating system shell, in a browser. And so we want to show you some of this innovation starting with how it’s going to reshape the largest software category on planet earth — which I’ve been working on for a long time — which we are very, very excited about: Search.
“Microsoft believes there are two things that are now emerging: one is conversational AI agents. Wherever we go, we will encounter conversational agents. All computer interactions will be mediated by an agent that helps you. In fact, we plan to embed conversational agents as a kind of co-pilot across every application canvas (OS, browsers, and more). And we want to apply this innovation to reinvent what is currently the largest software category on the planet — something I’ve been working on for a very long time — and we are extremely excited about it. That is search.”
AI is going to completely change what people expect from search. We are grounded in the fact that Google dominates this space. We feel like a new race is starting with a completely new platform technology. I’m excited for the users to have choice finally, and a real competitive race out there…
“AI is going to completely change what people expect from search. We are fully aware that Google currently dominates this market. We feel that a completely new race is beginning, driven by a completely new platform technology. I’m excited that users will finally have a real alternative (Microsoft Bing) and genuine competition to choose from…”
Microsoft CEO Satya Nadella seems convinced that the conversational AI agent embedded in the Bing search engine will fundamentally transform the existing search experience. While he openly acknowledges the reality that Google overwhelmingly dominates the market today, he also believes Bing can become a truly formidable competitor.
The last time I checked Search was the most profitable category there is on Planet Earth, so all I need is a few more users, and someone else I am competing with has to keep all of their users and all of their gross margin. I’m looking forward to that… There is enough surplus that goes to one place, and I think it would be nice if it were evenly distributed.
He said, “The last time I checked, search was the most profitable business on the planet,” and added that if Microsoft can pull just a small share of users away from the search market that Google currently dominates, then “the surplus that is now flowing to a single company could be distributed more evenly.”
That surplus, which currently flows to a single company (Google), being more evenly distributed would mean an increase in Bing’s search market share, and Nadella’s position is that this can be achieved by improving the search experience through AI.
Meanwhile, Alphabet (GOOG), Google’s parent company, generated $162.4 billion in search revenue in 2022 — roughly 203 trillion won.
If Microsoft, with the AI-reinvented Bing, can capture even 20% of Google’s market share, it could see annual revenue growth of more than 40 trillion won.
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