Microsoft gives up on internet search to build a better AI brand

Two weeks in the past at its Ignite occasion, Microsoft made one thing of a snoozy announcement: the corporate was rebranding its generative AI-based Bing Chat and calling it Copilot as a substitute.

Ho-hum. One other day, one other change within the firm’s branding technique. Par for the course, proper?.

However the announcement was extra consequential than you may assume. It signaled Microsoft has thrown within the towel on the web search battle with Google and is popping its full consideration to AI.

Copilots all over the place

To know why, let’s check out Microsoft’s innocuous-sounding announcement. The corporate is renaming Bing Chat and Bing Chat Enterprise, each of which is able to now be known as Copilot. From a branding perspective, it makes good sense as a result of it unifies all the firm’s genAI efforts beneath one model. Microsoft already has a number of AI instruments beneath the Copilot moniker, together with Copilot in Home windows, Copilot for Microsoft 365 (at present solely out there for enterprise prospects), and Microsoft Safety Copilot, with others to be launched.

Microsoft can be making the chat model of Copilot out there without spending a dime on the internet. Not do it’s important to use Bing to entry it. You do, nevertheless, want a Microsoft ID or an Entra ID, which is issued by companies as a part of the corporate’s cloud identification and entry administration resolution. The Copilot web site works with Edge and Chrome in each Home windows and macOS.

Microsoft additionally introduced its Copilot line will assist OpenAI GPTs, permitting companies and people to create their very own personalized variations of Copilot.

So what’s the massive deal?

It was an unsurprising announcement that made loads of sense, provided that Microsoft is betting the corporate on AI. However dig slightly deeper, and also you’ll discover it’s a sign Microsoft is ceding the search market to Google, believing search is the previous and AI is the long run.

Microsoft in February launched Bing Chat, powered by ChatGPT from OpenAI, through which Microsoft has invested $13 billion. Burying the most-powerful genAI on the planet inside an also-ran search engine and the also-ran Edge browser appeared an odd choice. Why conceal it inside merchandise the overwhelming majority of laptop house owners by no means use?

Microsoft did so as a result of it apparently hoped to seize search market share from Google. Individuals would flock to Bing for its genAI instrument, the corporate believed, and eat into Google’s dominance.

Microsoft needed to do one thing to assist the flagging Bing. Within the first quarter of 2023, when Bing Chat was launched, Google had 85% of the worldwide search market, with Bing far behind with solely 9%. Even when Microsoft didn’t instantly dominate web search with Bing Chat, merely grabbing just a few factors of market share from Google may have added as much as billions in new income.

Microsoft CEO Satya Nadella knew drastic measures had been wanted if his firm needed to eat into Google’s search monopoly. As he defined just lately in testimony within the US Division of Justice’s antitrust go well with in opposition to Google, “You rise up within the morning, you sweep your tooth, and also you search on Google.”

Google was so dominant, he mentioned, that the web ought to now be known as the “Google internet.”

And he all however admitted Bing couldn’t catch Google as a result of Google has a greater search engine. It’s higher, he mentioned, as a result of way more searches are executed on Google than are executed on Bing, so Google has extra knowledge that can be utilized to enhance its search than Microsoft has.

Given all that, embedding a genAI chatbot into Bing and making an enormous splash with the transfer was about the one hope Microsoft needed to catch up.

Huge publicity, small payoff

Regardless of the publicity and all of the hype Bing Chat garnered, the choice didn’t transfer the needle within the search market. Between Could 2023 and July 2023, the most recent figures out there, Google’s share of web search ranged between 83% and 87% and Bing’s share between 7% and 9%. Google remained as dominant as ever. Nadella’s massive wager didn’t repay.

That brings us to at this time. Nadella acknowledged making an attempt to eat into Google’s search market share was a misplaced trigger, even when piggybacking onto one of the crucial hyped merchandise the world has seen. So, it selected to chop its losses and concentrate on larger sport. By one estimate, AI will generate almost $2 trillion by 2030, dwarfing web search.

Unifying Microsoft’s AI efforts beneath a single model will assist it preserve its AI lead over Google and different rivals. Making its genAI product out there without spending a dime to anybody with a Microsoft-related ID who makes use of Chrome or Edge may even assist it prolong that lead.

Nadella is betting that — some day — individuals will get up, brush their tooth, and have a chat with Copilot.

Copyright © 2023 IDG Communications, Inc.

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