Google takes wraps off its answer to Microsoft’s AI search challenge

By Jeffrey Dastin and Greg Bensinger

MOUNTAIN VIEW, California (Reuters) -Alphabet Inc’s Google on Wednesday unveiled more artificial intelligence in its products to answer the latest competition from Microsoft Corp (NASDAQ:), which has threatened its perch atop the nearly $300 billion search advertising market.

Through an internal project code-named Magi, Google has looked to infuse its namesake engine with generative AI, technology that can answer questions with human-like prose and derive new content from past data.

The effort will be the most closely watched as Google executives take the stage at its yearly conference I/O in Mountain View, California, near its headquarters. The result could alter how consumers access the world’s information and which company wins the global market for search advertising, estimated by research firm MAGNA to be $286 billion this year.

“We are reimagining all of our core products, including search,” Sundar Pichai, Alphabet (NASDAQ:)’s CEO, said after he took the stage at the event.

He said Google is integrating generative AI into search and other products, including Gmail, where it can create draft messages, and Google Photos, where it can make major changes to images.

Alphabet shares rose 2.5% after the news. They have risen by a fifth so far this year, compared with a 17% rise in the tech-focused index.

For years the top portal to the internet, Google has found its position in question since rivals began exploiting generative AI as an alternative way to present content from the Web.

First came ChatGPT, the chatbot from Microsoft-backed OpenAI that industry observers called Google’s disruptor. Next came Bing, Microsoft’s search engine updated with a similarly dextrous chatbot, which can answer queries where no obvious result existed online – like what car seat to buy for a particular model vehicle.

Now, Google is making its ChatGPT competitor, Bard, multimodal like OpenAI’s GPT-4, the company said on Wednesday, and will make it accessible to people in more than 180 countries and territories.

That means customers will be able to prompt Bard with images, not just text – for instance asking the chatbot to write a caption to a picture they hand it, it said.

Behind Bard also is a more powerful AI model Google announced called PaLM 2, which it said could solve tougher problems. PaLM 2 is currently available as a preview.

Pichai said one of its PaLM 2 models is lightweight enough to work on smartphones. The Bard chatbot is now running on PaLM 2, the company said.

Microsoft last month touted U.S. share gains for Bing, recently growing to more than 100 million daily active users, still dwarfed by billions of searches on Google.

Google’s rivals have taken its research breakthroughs from prior years and run with them, outpacing their inventor. That has represented a technological affront and a business one: Microsoft said every percentage point of share it gained in search advertising could draw another $2 billion in revenue.

Pichai said earlier this year that generative AI to distill complex queries would come to Google Search, as would more perspectives, “like blogs from people who play both piano and guitar.”

It is also expected to showcase new hardware for its lineup of Pixel devices, media have reported.