Microsoft should pay whatever it costs to replace Google on Samsung phones
- Samsung is reportedly looking to replace Google Search with Microsoft's Bing as the default search engine on its phones.
- That makes the threat to Google's search dominance from Microsoft and OpenAI more real.
Microsoft's partnership with OpenAI, the creator of the viral success that is the ChatGPT chatbot, presents the biggest threat yet to Google's stranglehold on the web search market.
That threat became a little more real this week, as The New York Times reports that Samsung is considering replacing Google with Microsoft's Bing as the default search engine on its mega-popular line of Android smartphones.
There's likely a lot of money at stake in Samsung's decision: In 2014, Google paid Apple $1 billion to be the default search engine on the iPhone — an amount that was recently estimated to have ballooned to $15 billion in recent years. We don't know the details of Samsung's arrangements with Google, but it seems safe to assume that the money involved is at least on that same scale.
Now, if the opportunity arises for Microsoft to ink that type of partnership with Samsung, it should pay whatever it takes to make it happen, industry analysts said. No matter how many billions it might cost, those experts say, it's worth it for Microsoft to seize the moment to get so many users on to Bing — and away from Google.
"Microsoft absolutely should do that," RBC analyst Rishi Jaluria told Insider. "Samsung is pretty dominant in the Android ecosystem, with a huge market share worldwide. And not only is there incremental business that you get with Bing as the default search engine, you now start to gain mindshare that way."
And that's not to mention that even small gains from Google are worth real money to Microsoft.
"For every 1 point of share gain in the search advertising market, it's a $2 billion revenue opportunity for our advertising business," said Philippe Ockenden, Microsoft's corporate VP of finance, in February.
Bing has gone from punchline to serious threat to Google
As recently as a few months ago, Bing's meager market share compared to Google made it an industry punchline.
However, since Microsoft's $10 billion investment into OpenAI, it has poured a ton of money and resources into injecting AI into Bing. Users can now use Bing to talk to a custom version of the ChatGPT chatbot, too. That's starting to make Bing a more interesting alternative to Google for many users.
"The idea that anyone would use Bing five months ago was a joke," Jaluria said. "But now you're having serious conversations about using Bing instead of Google. And so if Microsoft has that opportunity they should absolutely take it."
The fact that Samsung is even considering changing its default search engine presents a rare moment of weakness for Google, especially on smartphones. A vast majority of smartphones have Google set as their default search engine, Insider previously reported. Android itself, the most popular operating system in the world, is developed by Google, as is the market-leading Chrome browser.
The hype around the new and improved Bing gives Microsoft a rare shot at breaking through that dominance, the analysts said. Google is seen as being slower and more deliberative when it comes to integrating AI with its search engine, while Microsoft has been very public about moving full steam ahead with bringing OpenAI-based technology to everything from Bing to Microsoft Office to the GitHub code repository.
While the experts say not to count Google out entirely, Microsoft now has a rare chance to ride the wave and get Bing out to new audiences. That's especially important given that Microsoft doesn't have a viable phone operating system of its own. Investing big to entrench Samsung as a partner now could pay dividends for Microsoft later, the experts said.
"[Microsoft] made huge investments to push the market with this and if they're going to win they need to win larger shares of the mobile market," said Futurum Research's Dan Newman.