Saudi Aramco and Samsung Partner for 5G Ecosystem
Saudi Aramco has announced a partnership with Samsung Electronics, a leading Korean conglomerate, to establish a localized industrial 5G technology ecosystem in Saudi Arabia. The collaboration will begin with the development of private networks within the country. The two companies have signed a non-binding memorandum of understanding (MoU) for the proposed partnership plans.
The main objective of the collaboration is to contribute to the digital transformation of various industrial sectors in Saudi Arabia, including energy, petrochemicals, and manufacturing, by utilizing advanced 4G and 5G technologies that provide secure, fast, and reliable communication to meet critical business requirements.
The MoU follows the recent launch of Aramco Digital Company, which aims to accelerate the digital transformation in the Kingdom of Saudi Arabia, as well as the Middle East and North Africa (MENA) region. This partnership between Saudi Aramco and Samsung Electronics is expected to bring about a significant boost to the technological capabilities of the industrial sector in Saudi Arabia, further driving its economic growth and development.
Interesting Read: Adform and Digiseg offer new ad tool for Saudi Arabia advertisers
OMD India serves up media mandate win for McDonald’s North & East
OMD India has secured the media mandate for McDonald’s India – North & East (Connaught Plaza Restaurants) after a multi-agency pitch. As part of their role, OMD India will be responsible for developing and executing integrated media planning and buying strategies for the brand’s entire portfolio. The agency has been tasked with generating innovative and forward-thinking end-to-end media solutions for the brand, which will be serviced from their Gurgaon office.
McDonald’s has partnered with OMD India with the objective of prioritizing ROI and unleashing the next phase of growth for the brand. The partnership was secured because of OMD’s broad range of products and capabilities, particularly in the areas of Category Planning, Investment Planning, Audience Understanding, and Channel Planning.
OMD is renowned globally for driving significant business transformation for top brands. They won the McDonald’s account by demonstrating their innovative, data-driven expertise and comprehensive approach to marketing. They presented a strategy that exceeded the brand’s expectations, showcasing their ethos of Better Decisions, Faster.
Rajeev Ranjan, managing director, McDonald’s India – North and East said,
We are delighted to welcome OMD to McDonald’s India (North and East) family. OMD has a strong track record of adding value through right talent, tools and technology. We are looking forward to this partnership and the OMD advantage – delivering the best of consumer attention and seamless integration between awareness and performance through customer-centric differentiated media strategy, effective planning and optimal media investment decisions.
Anisha Iyer, CEO, OMD India said,
McDonald’s is a brand that is close to everyone’s heart and needs no introduction. Our partnership with them is a testament to OMD’s approach rooted in disruption, agility, empathy and the strength of our creativity – that tests boundaries, challenges convention and ignites change. We are focused on leveraging our unique resources to take the McDonald’s brand journey from strength to strength in North and East India and help unlock sustainable growth.
Interesting Read: The Adtech Landscape in 2023
Criteo boosts retail media with Brandcrush buy
Criteo has acquired Brandcrush, an Australia-based company whose platform enables the buying and selling of omnichannel retail media, including offline media channels.
The acquisition allows retailers to manage their entire media inventory across both e-commerce and physical retail. It also enables brands and agencies to easily discover and purchase omnichannel media from leading retailers. The Australian ad startup provides a 360° media asset management and activation, ranging from in-store activations such as digital screens, point-of-sale displays, and sampling to out-of-store activations like inbox sampling and inserts, and online activations such as digital circulars, email, and social media. With Criteo’s media solutions, including sponsorships, on-site display, and off-site ads, advertisers can now scale their campaigns across the entire omnichannel retail media landscape.
With the new partnership, brands will have the convenience of a single sign-on to oversee and assess both their online campaigns through Criteo and in-store activations through Brandcrush. Criteo’s recent acquisition has allowed the company to increase its presence and improve its capabilities in the fast-growing Asia-Pacific retail media market.
Interesting Read: How Will Partnership With Criteo Benefit Flipkart’s AdTech Business?
The retail media industry offers a significant revenue opportunity for retailers but outdated methods such as emails and spreadsheets are still in use for managing media inventory and purchasing. Retailers can now use Brandcrush’s specialized solution to streamline the management of media orders, inventory, and suppliers across all media channels. This enables retailers to increase revenue by allowing self-service discovery and booking of shopper media without adding overhead costs.
As reported by Adexchanger, Criteo and Brandcrush have collaborated on some pitches, and although marketing efforts like free samples and in-store displays are not purchased in CPMs, they can still be measured. Brandcrush uses control groups to attribute incremental new sales, and Criteo is increasingly crediting itself for driving online advertising to in-store activity. Although programmatic campaigns and in-store marketing cannot be purchased in the same way, they can still be measured together. In-store activations with brands and retailers are continuously evolving.
Sherry Smith, General Manager of Global Enterprise at Criteo said,
As marketers continue to invest in retail media, offline is emerging as the new frontier – and brands and agencies must be able to effectively plan, execute, and measure their campaigns in an integrated way.
Brandcrush directly addresses the current market need for consolidated offline and online advertising management, and our combined solutions will make omnichannel retail media strategies a reality, empowering retailers to own their entire retail media ecosystems.
Teresa Aprile, Co-Founder, and CEO at Brandcrush,
By combining forces, we’re bringing together our platform with Criteo’s best-in-class retail media technology to create the most effective monetization platform for retailers.
With Criteo’s retail media client footprint of 175+ retailers and nearly 1,800 brands – unlike any others in the industry – we’re also tapping into their unique scale to truly harness the power of omnichannel across the entire advertising ecosystem.
Interesting Read: The Adtech Landscape in 2023
Baidu unveils ERNIE, the AI-powered chatbot to ChatGPT
Baidu’s ERNIE Bot, the ChatGPT-like AI chatbot to transform China’s AI landscape in March. Baidu one of China’s biggest search and artificial intelligence firms plans to implement its artificial intelligence chatbot ‘Ernie’ into its search engine in March. ERNIE, which stands for “Enhanced Representation through Knowledge Integration,” is an AI model that not only generates text, such as poems and essays but also has the capability to create images from text, which is a combination of the functionalities of ChatGPT and Midjourney. This feature makes ERNIE a more comprehensive and valuable tool.
Baidu’s CEO Robin Li announced in an internal memo that ERNIE Bot will be utilized in all of Baidu’s operations, including search and cloud services. Moreover, Baidu plans to incorporate ERNIE Bot into its driverless car technology and smart speaker for enhanced user experience. Currently, Baidu’s cloud services hold just 9% of the market, but the addition of an AI chatbot like ERNIE Bot could give the company a competitive edge.
Li said in the memo,
AI technology has reached a tipping point and all industries will inevitably go through transformation.
Baidu stands as the best example of the long-term growth of China’s AI market and is advancing at the forefront of this new wave.
Interesting read: The AI Search War: Microsoft & Google Compete for Search Engine Leadership
China’s biggest tech companies, such as Baidu, Alibaba, and Tencent, along with top universities and city governments, are vying to develop their own AI chatbots to keep up with the global competition. Despite being beaten to the punch by American-made chatbots like ChatGPT and Microsoft’s Bing, these Chinese companies have been investing in their in-house AI capabilities for years, and are now pushing forward to create their own AI chatbot versions.
In China, regulators review all online content, including comments and search results, before posting to ensure it complies with a growing list of banned topics. Baidu, the Chinese Google has become adept at filtering content but faces a challenge in applying these constraints to an AI chatbot like ERNIE, which generates fresh content with each use. The ability of ChatGPT to create a sense of organic conversation by responding to each prompt is precisely what makes it so difficult to censor.
If Beijing’s worries about Ernie Bot’s unfiltered responses increase, Baidu may need to halt its operation shortly after its launch. Well, that time will tell! China’s tech giants have so far used their AI capabilities to develop less politically risky products like cloud services and driverless cars. Baidu’s launch of ERNIE Bot puts the company in a precarious position, particularly after a government crackdown on tech companies.
After years of regulatory scrutiny and a weakened economy due to COVID-19, the launch of ERNIE Bot could be a significant move for Baidu’s future growth.
Interesting read: Taboola’s AI Ad-Creation Tool in Beta Testing: Revolutionizing Ad Tech
Wavemaker India Launches D2C Solutions Unit
Group M’s most awarded media agency, Wavemaker India, has recently launched a new Direct-to-Consumer (D2C) practice to assist brands in implementing and navigating successful D2C strategies for growth. Notably, the media agency is already working with established brands such as MTR Foods, Nokia, L’Oréal, and many others.
In addition to launching a new Direct-to-Consumer (D2C) practice, Wavemaker India’s modular approach will enable brands to choose specific solutions they need for optimization. Moreover, the media agency will introduce a separate program that focuses on working with D2C start-ups to scale demand and operations, providing more opportunities for growth and success.
Wavemaker India’s mandate involves providing end-to-end solutions for brands to simplify their Direct-to-Consumer (D2C) channel strategy and deployment. The media agency will assist clients with their technology stack, design customer experiences, set up a growth platform, and manage the entire fulfillment infrastructure to optimize brand performance.
Ajay Gupte, CEO – South Asia, Wavemaker said,
“We are committed to creating solutions which offer unparalleled growth to our brands and partners. We have been investing and building this capability for a few years now. Launching the D2C practice marks the expansion of our digital and E-Commerce offerings and is a step toward providing focused solutions for brands who are to manage their value proposition and value chain.”
Vishal Jacob, Chief Transformation and Digital Officer, Wavemaker India said,
“We have seen a lot of brands wanting to build a direct connection with their consumers. Consumers too are looking for a closer relationship with brands making it important for D2C marketers to adapt and stay relevant in the game. Our D2C practice will help marketers plan better and tailor their offerings to better suit their customers.
Interesting Read: The AI Search War: Microsoft & Google Compete for Search Engine Leadership
Meta Follows Twitter’s Lead, Unveils Paid Verification Service for FB & IG
Meta Platforms Inc. (formerly known as Facebook Inc.) has launched a new paid subscription service, allowing users to verify their accounts using government-issued identification. This verification will give users a blue tick mark, similar to what is already available on Twitter, to indicate that their accounts are authentic.
It will cost $11.99 for web access or $14.99 a month on iOS and Android. Meta’s new subscription service, which grants users a verification badge in exchange for a monthly fee, is similar to Twitter’s revamped Twitter Blue service. There will be no changes to accounts on Instagram and Facebook that are already verified based on prior requirements, including authenticity and notability.
How will subscribers benefit?
Subscribers to Meta’s new paid subscription service will enjoy several benefits, including,
- Account Verification
- Protection from impersonators
- Increased visibility of their posts
- Easy access to customer service
- Increased exposure on Instagram’s Explore page and Reels
- Reduction in fake accounts
Zuckerberg in a Facebook post said, Meta Verified “is about increasing authenticity and security across our services.”
Meta is the latest social platform to add a paid subscription feature. But why?
Meta’s introduction of pay-for-identity verification on social media is a sign of the company’s efforts to diversify its revenue streams. Its ad business has declined following Apple’s decision to curtail its ability to track users’ online activities on iOS after it introduced stringent privacy changes. Last year, Facebook, which makes its money almost entirely through advertising, estimated that Apple’s move would lose the company $10 billion in ad revenue by 2022.
Meta is already late to the party! Other major platforms, including YouTube, Twitter, and Snapchat, have already launched premium subscription services to appeal to their most dedicated users and increase their average revenue per user (ARPU).
Meta Verified will be rolled out first in Australia and New Zealand this week and in other countries soon. While most other platforms have tested subscription plans in the U.S., Meta plans to start with a smaller market.
Paid verification badge programs are becoming more common as companies attempt to generate additional revenue. However, users are increasingly selective about paid services, even for products and services they receive. Identity verification is particularly intangible, which may make it even less appealing to users. Although it is a smart move to help diversify against the dependence on ad revenue, its success is undetermined. Conservatively, even if it converts a small percentage of its monthly active users, it can generate meaningful revenue.
It will be interesting to witness if the users find it valuable to pay for these services.
Interesting Read: The AI Search War: Microsoft & Google Compete for Search Engine Leadership
Lemma and Maxamtech partner to offer real-world DOOH clients Metaverse Billboards
Lemma has partnered with Maxamtech to introduce metaverse billboards to real-world digital out-of-home (DOOH) clients, enabling brands to offer audiences a dual experience in the virtual and physical worlds. This virtual advertising resembles a brand’s real-world representation, giving advertisers the ability to redirect users to their website or landing page, thereby enhancing customer engagement. By leveraging this platform, brands can significantly increase their overall impact on their target audience.
The collaboration between Lemma and Maxamtech will assist global brands in creating an indelible brand impression on untapped audiences through the virtual billboards in the Metaverse, connecting the brand story seamlessly across both realms.
Billboard advertising in Metaverse
Billboard advertising in the Metaverse is currently cost-effective, and it presents a potentially lucrative opportunity to reach a new audience as the Metaverse continues to grow. By leveraging this technology, brands can establish a presence in the virtual world and make a lasting impression on a new and untapped audience.
Billboard ads are a great starting point for brands to explore Metaverse advertising. Brands can begin with billboards and later expand into other opportunities such as events, product placement, and more. This platform provides a unique opportunity for brands to establish a presence and explore the many advertising opportunities available in the Metaverse.
Interesting Read: Advertise Your Brand in the Metaverse: The Future of Digital Advertising
Win-Win partnership
Maxamtech is a significant player in the market, with a growing audience in the gaming and virtual worlds. Through its partnership with Lemma, the two companies will provide clients with strategic in-game placements, enhancing customer engagement by enabling advertisers to redirect users to their website or landing page.
This feature allows brands to leverage the growing popularity of virtual worlds and gaming to create targeted advertising campaigns and establish a presence in the Metaverse. By collaborating with Maxamtech, Lemma can deliver a powerful platform to its clients, enabling them to engage with a growing audience in virtual space.
And that’s what they said
Gulab Patil, Founder and CEO of Lemma, said,
Metaverse billboards can reach a global audience and help expand a brand’s reach and target new markets efficiently. Further, virtual billboards can show unique advertisements to each user based on their demographics, interests, and actions. Ad personalisation reduces waste and boosts the efficiency of advertising campaigns as a whole.
He continues,
Our decision to offer metaverse billboards to the clients will ensure that brands who aim to reinvent themselves to align with audiences in the Metaverse as new patterns of behaviour and consumption emerge will be able to do hassle-free through Lemma.
Xerxes Mullan, Founder of Maxamtech Digital Ventures said,
We are constantly looking for new and exciting ways to grow and monetise our gaming platform, and this partnership with Lemma presents a perfect opportunity to do so. We look forward to working with them to offer brands and advertisers innovative ways to reach audiences with engaging and cutting-edge new ad units.
Interesting Read: How Will Dubai’s Metaverse Sector Contribute To Its Economy By 2030?
Google Ads Enhances CTV Advertising
Google’s Display & Video 360 (DV360) platform has added new features that help advertisers better plan, buy, and measure their connected TV (CTV) campaigns. With the shift to streaming over the last few years, an increasing number of advertisers have prioritized building connected TV (CTV) campaigns into their media strategies. As more advertisers focus on CTV, the platform’s new features aim to improve the targeting, forecasting, and measurement of CTV campaigns.
Let’s take a look into some new features in Display & Video 360 that advertisers use to plan, buy and measure CTV campaigns.
Plan: Reach Planner
Reach Planner in Display & Video 360 is a tool to accurately forecast the reach and expected performance of CTV campaigns. It helps advertisers discover new publishers and CTV inventory and drive more efficient budget allocation decisions.
TV functionality feature in Reach Planner enables advertisers to evaluate the unique and incremental reach of streaming publishers such as YouTube, Hulu, and Roku, as well as linear TV. This information helps advertisers make more informed decisions when it comes to budget allocation and discovering new CTV inventory.
The Reach Planner update is currently available to advertisers in the US, Japan, Vietnam, France, and Germany. Advertisers in the US can also use TV consumption data from the top 150 local Comscore markets to narrow their target audience further.
Another new feature is Deal ID forecasting, which allows advertisers to understand how a Preferred Deal or Programmatic Guaranteed deal might perform before running. This is particularly helpful for CTV campaigns since much of the valuable inventory is sold through deals, especially during significant events like the World Cup or Super Bowl.
Interesting Read: Connected TV Explained: The Essential Glossary Of CTV
Buy: Premium placements
YouTube CTV (Connected TV) inventory refers to the ad space available on YouTube that can be accessed by viewers through a TV device that is connected to the internet. Advertisers who want to access this inventory can do so through Instant Reserve, which is a feature that enables them to easily book premium placements on YouTube CTV. Instant Reserve also unlocks audience targeting capabilities that were previously only available for open auction buys.
Instant Reserve offers curated packages that include YouTube TV and other YouTube Select lineups. These packages allow advertisers to reach their target audience more effectively by selecting placements that align with their specific goals and objectives.
Credit: Google
Besides Instant Reserve, another way to secure premium CTV inventory is by creating deals or activating inventory packages in the TV section of Display & Video 360’s Marketplace. This means that advertisers can access premium CTV inventory and secure it in advance of their campaign launch, giving them greater control and certainty over their campaign performance.
In addition to the Marketplace, Display & Video 360 also recently launched CTV audience features that allow advertisers to reach audiences wherever they stream connected TV content. Advertisers can use their first-party audience lists to connect with people they already have relationships with, and then expand the reach of their CTV campaigns to reach larger groups like “sports enthusiasts” through Google audiences. This helps advertisers to increase their campaign reach and effectiveness by targeting specific groups of people who are more likely to be interested in their products or services.
Measure: Ad Frequency and Reporting
Display & Video 360 can help advertisers manage ad frequency on CTV devices. Advertisers can manage ad frequency by tracking how many times an ad has been shown to a viewer and using this information to adjust the delivery of ads accordingly. It also provides insights into which publishers and strategies are driving the greatest incremental reach, which enables advertisers to optimize their campaigns and improve their overall performance.
They also released a Unique Reach Overlap report that helps advertisers identify duplicate reach across publishers, campaigns, and devices. The report provides information that can be used to determine campaign-level frequency caps, which helps minimize overlap and reduce media waste. This feature is available globally for all Display & Video 360 accounts and Campaign Manager 360. Advertisers can use this report to make data-driven decisions and optimize their campaigns for better performance.
Google’s Display & Video 360 platform has introduced new features to help advertisers plan, purchase, and measure their CTV campaigns, indicating the platform’s responsiveness to the increasing demand for CTV advertising.
Interesting Read: The AI Search War: Microsoft & Google Compete for Search Engine Leadership
Noon Acquires Leading Online Fashion Retailer Namshi
Noon, a leading e-commerce company based in Riyadh, has successfully acquired online fashion retailer Namshi. The acquisition is now in effect, immediately expanding Noon’s offerings in products and services. The online marketplace made the announcement on Monday, signaling its continued growth and expansion in the industry.
Noon’s logistics, fulfillment networks, fleet, and in-house e-commerce experts will be available to Namshi, which will remain a separate entity. The company statement said that the e-commerce platform will continue to support Namshi’s growth as an independent entity within the company.
The fashion platform, which has been serving customers in the UAE, Saudi Arabia, and other countries since 2011, has more than 1,200 brands. Namshi’s acquisition will broaden Noon’s offering of products and services to include more fashion and lifestyle brands for consumers throughout the region.
Hisham Zarka, chief technology officer of the Noon Group and co-founder of Namshi said,
“We know that both Noon and Namshi have a long way to go, but that just means that the opportunity ahead remains immense.”
“This merger will enable Namshi to make deep and long-term investments and in the months and years to come, our customers and partners can look forward to better assortment, pricing and service as these investments are realized.”
Dhruv Paul, group general counsel of the Noon Group said,
“This acquisition is a great opportunity for both Noon and Namshi. It allows us to reach out to new audiences while offering them unique products.”
As of last August, Noon had an agreement with Emaar Properties to purchase Emaar Malls in Namshi for AED 1.23 billion ($334.9 million). The completion of the acquisition comes after Emaar Properties shareholders approved the sale of Namshi to Noon.
Dubai Chamber of Commerce forecasts UAE’s eCommerce market to reach $9.2 billion by 2026, a 92% increase from 2021. UAE’s eCommerce Sector experiencing significant Growth due to rising consumer demand for online shopping and strong investment in infrastructure
Interesting Read: Lemma and Phi Advertising Collaborate to Bring Programmatic Advertising to UAE Market
The AI Search War: Microsoft & Google Compete for Search Engine Leadership
The swift ascent of ChatGPT, developed by OpenAI and supported by Microsoft, has caused a sensation worldwide with its capability to deliver rapid results. In fact, within just two months of its release, the app has garnered 100 million users, making it one of the quickest-growing applications globally.
Microsoft announced the launch of its latest AI product, a revised version of Bing-powered by a custom-made OpenAI language model that is designed specifically for search and is more powerful than ChatGPT. The tech company describes tools as an AI copilot for the web. The company will also be upgrading its Edge browser, bringing new features to the table.
The announcement from Microsoft arrives around the same time as Google’s announcement of Bard, its answer to ChatGPT. As ChatGPT posed a challenge to Google, the company responded with Bard. Microsoft has now entered the field with a cutting-edge search engine that utilizes artificial intelligence.
Interesting Read: Google’s BARD vs ChatGPT: Which AI Will Rule the Search Realm?
However, during its live demo, Google’s AI algorithm, Bard, made grotesque errors, resulting in a loss of $100 billion in market capitalization for its parent company. What precisely occurred to cause such significant damage to Google? Industry specialists have pointed to a mistake in the response given by the chatbot in Bard’s promotional material. This error happened in response to the query, “What new discoveries from the James Webb Space Telescope (JWST) can I tell my nine-year-old about?”
Bard’s response in the online demo includes an answer that states the telescope “took the very first pictures of a planet outside of our own solar system.”
The error was picked up by many astronomers including Grant Tremblay, an astrophysicist at the US Center for Astrophysics, who tweeted:
Not to be a ~well, actually~ jerk, and I'm sure Bard will be impressive, but for the record: JWST did not take "the very first image of a planet outside our solar system".
the first image was instead done by Chauvin et al. (2004) with the VLT/NACO using adaptive optics. https://t.co/bSBb5TOeUW pic.twitter.com/KnrZ1SSz7h
— Grant Tremblay (@astrogrant) February 7, 2023
The incident highlights the fierce competition between Google and Microsoft, as Bard was developed to rival Microsoft-backed ChatGPT. In less than a week, we witnessed the two big tech giants engage in all sorts of acrobatics to secure their positions and control the market as they compete to lead the next wave of AI-enhanced computing.
Who will win the AI-powered search/chat war?
Despite the fact that the market is still bullish on Google, experts believe they are still a few steps behind Microsoft, which has recently caught up to ChatGPT’s advances. Today, Microsoft stands ahead on the AI front. People are curious about the potential impact of large language models (LLMs) on search. Last week, Microsoft caused a sensation by integrating OpenAI’s technology into Bing search.
“First of all I have the greatest of admirations for Google and what they’ve done. They’re unbelievable with great talent. I have a lot of respect for Sundar Pichai and his team.I just want us to innovate. Today was the day when we brought some more competition to search. We’ve been at it, believe me, I’ve been at it for twenty years and I’ve been waiting for it.
But at the end of the day, they are the 800 pound gorilla on this which is what they are and I hope that with our innovation they will definitely want to come out and show that they can dance and I want people to know that we made them dance and I think that will be a great day.”
– Satya Nadella
Google’s recent actions certainly make it look like they are dancing. Despite their superior AI models and expertise, they have not effectively commercialized this technology due to a lack of a culture that supports innovation. However, the pressure from Microsoft and OpenAI is quickly transforming this situation.
The intense competition between the leading tech companies has been captivating to observe, with each company making impressive announcements in quick succession. Behind the scenes, there is a fierce battle being waged in the boardrooms of these tech giants. The heightened interest in the latest AI-powered version of Bing has resulted in high demand for the product, causing a waitlist to form for those eager to try it out.
Race to ace the AI-powered search industry
Google holds a dominant position in the global search market with a market share of over 93%, while Bing’s share is 3% in January, 2023. According to Microsoft Chief Financial Officer, Amy Hood, search advertising represents a significant portion of the digital advertising industry, accounting for an estimated 40% or $200 billion of the $500 billion market. The majority of these revenues are generated by Alphabet, which reported a total of $163 billion in search advertising last year.
Its business model revolves around advertising and search-based revenue, with roughly 60% of its income coming from Google Search. Microsoft announced the integration of ChatGPT into Bing sent Google into a state of emergency. A significant disruption to this income stream could have disastrous effects. The emergence of ChatGPT as an AI-powered alternative to search represents a potential threat to Google’s business.
Microsoft may be counting on its chatbot-powered information search to attract new users who could then use Bing for higher-value searches. This strategy may come at the cost of lower margins, at least until expenses can be reduced. However, it would only be justified if Microsoft can effectively challenge Google and gain a significant market share.
“for every 1 point of share gain in the search advertising market, it’s a $2 billion revenue opportunity for our advertising business.”
-Microsoft
Challenges for Google: Balancing Cost and Market Dominance
The shift to AI-based large-language models could also increase Google’s costs, in addition to the threat to its market share. A research note from Morgan Stanley analyst Brian Nowak, quoted by Barron’s, highlights the potential for increased costs for Google due to the shift towards AI-powered search queries. The note indicates that a 10% shift in queries to AI will result in a $1.2 billion increase in Google’s operating costs. If the shift were to reach 50%, expenses would grow by $6 billion and trim pretax profits by 6%. Nowak’s perspective is that AI-powered search queries will cost Alphabet roughly five times more than the current method.
The partnership between Microsoft and OpenAI presents a double challenge for Alphabet investors, as it could result in a loss of market share and increased costs. This comes at a time when Alphabet is already facing regulatory scrutiny over allegations of monopolistic practices and misinformation on its platforms. The Microsoft-OpenAI deal has the potential to add additional stress to the already challenging situation for Alphabet and its investors.
The current technology and business model that has produced consistent profits for 20 years may be challenging to let go of. However, CEO Sundar Pichai is determined to resolve this “innovator’s dilemma” and find the best solution. On the other hand, Microsoft CEO Satya Nadella is hoping that Bing will gain popularity as a search term before Pichai finds a solution.
Wrapping up
In light of the recent “Bard AI fiasco,” Alphabet CEO Sundar Pichai must swiftly resolve the “innovator’s dilemma” and find a suitable solution. Meanwhile, Microsoft CEO Satya Nadella has high hopes for Bing to establish itself as a popular search term before Pichai’s resolution. The pressure is on both tech leaders as they navigate the constantly evolving technology landscape and competition in the search engine market.
Microsoft is ready to reclaim its position at the forefront. Google, be prepared, as Microsoft takes the lead in this first round. Witnessing this AI search engine battle is going to be a lot of fun!
Interesting Read: Tête-à-Tête With ChatGPT- The Power Of AI
