Most people, on most days, have no idea how AI influences the choices we make. It’s invisible. Our home feed on Facebook, Amazon’s Alexa responses, Google search results etc. all seriously influenced by an AI algorithm or two.

ChatGPT by Microsoft’s OpenAi brought a more detailed conversation into the public consciousness in November last year. I had dinner with an accountant on Friday who used ChatGPT to write the ‘thank you’ notes for attending his granddaughter’s recent nuptials. Cheating? Yes, for sure. A great use of time? Absolutely.

That’s what AI ultimately gives us – the most precious commodity we have.

We’ve only enjoyed AI in its basic form to date, but it’s already worth lots of money. Industry-shifting amounts of money – where Google may finally be shifted from the top dog spot because the game has now changed.

Google has spent 20 years at the top of the leaderboard for search, which has paid dividends. Literally. Search i.e. paid-for ads is the only serious profit-making centre in Alphabet. Their domination of the industry, which, depending on which stats you take, is between 80-96% of all search, generated the bulk of its 2022 £250bn revenues. Most other line items, including GCP, appear to either make a little, or a big fat loss.

For context: there are more searches made per day on Google than there are people on planet earth.

My favourite line item in Google’s financial report is “Other Bets”, which currently includes their investment into AI through vehicles such as Deep Mind. It’s hard to be exact, but it looks like Alphabet’s R&D budget is around £28bn annually, of which a large proportion will go directly to AI.

Apple, Meta, Alphabet, Amazon, MS et al are all pumping tens of billions into AI R&D annually. The ChatGPT launch late last year was a threshold moment fuelled by immense computational power where AI appeared sentient (it’s not). Its personal and commercial use cases are now looking real, meaningful, and accessible – somewhat exemplified by my 70-year-old non-techy accountant friend knowing about it and using it.

Generative AI has landed like a second big bang.

Forgive the over-cooked geek jokes for effect, but this truly is a seismic event – move over Web3, and Web2, and even perhaps the internet.

The fight for AI dominance has been going on for years behind the scenes between the tech Goliaths but MS and Google are now face-to-face on what looks like a level playing field. Microsoft with OpenAi’s ChatGPT and Google with its LaMDA-driven rival: Bard.

The prize is Search.

It’s up for grabs. And Microsoft doesn’t need much of it to seriously kick the revenue flywheel. Satya Nadella, the CEO of Microsoft, notes;

“There is such margin in search, which for us is incremental. For Google it’s not, they have to defend it all.”

It’s suggested that every percentage point of search is worth $2bn in revenue. Whether we believe that number or not, this asymmetric competitive challenge is one for which Microsoft has deep pockets, oodles of passion, and the timing edge to tackle. It’s almost a no-lose.

In Google’s recent IO event, the Bard launch (almost an afterthought in context, which was just plain weird) was so bad (AND it got an answer wrong) that Alphabet Inc lost $100bn over two days in share value, which is around 12%.

So. Will Bing with ChatGPT take a chunk out of Google?

Well, for the first time in 2 decades it now has the firepower to do so. Google’s Bard (the grumpy teenager of chatbots) has teething problems and doesn’t feel quite up to snuff – although for how long, well, I’m not sure I’d bet against Google in the long run.

The play? Search has now become chat, chat has become real, meaningful and useful.

Rather than a 60-70% successful page of search results on Google, we can now get one via natural language chat that nails our request. Boom.

Let’s see how Microsoft distributing via Bing handles this great power. I have to say at the first use they’ve not covered themselves in glory. The user experience to sign up is clumsy and in the usual Microsoft manner they’ve bloated the interface to the point where I’m confident the average user won’t quite be sure if they’re using the powerful AI engine, or not. Flumpery also reflected in their recent minor share price wobbles. I’m sure they’ll fix it.

So, with Microsoft’s vast distribution will they be able to capitalise on Google’s snoozles?

Let’s find out – who should we ask?

Bing or Bard?