Microsoft Gets a ChatGPT Bounce
App Downloads and Stock Price Rise Following Event
Microsoft just benefitted from a ChatGPT bounce. The evidence appeared both in app downloads and the stock price.
The company held a private event yesterday to debut its new GPT-3 integration with the Bing search engine and Edge browser. The product enhancements will introduce a new era in conversational search and likely signals the first credible threat to Google’s search dominance in more than 15 years.
Access to the new Bing and its chat-powered search requires signing up for a waitlist. Microsoft was encouraging users to move up on the waitlist by downloading its Edge Browser and Bing mobile app. Use of the new Bing (what we like to call BingGPT) today requires the Edge Browser. Microsoft also said the features would soon come to the Bing mobile app. Thus, the rush to download the applications.
Bing’s mobile app when from “unrated” in the iOS app store, which is not in the top 500 in terms of downloads, to 328 the day of the announcement to 10 the day after. Keep in mind this iOS app does not yet have the GPT-3 features. Users were downloading it to move up on the waitlist or to have it on their device, so they get the upgrade as soon as it is available.
Microsoft’s Edge browser also saw a big rise from 124 the day before the event to 82 the day after. Granted, using the Edge browser will be required to use the new Bing on the desktop at launch but not on iOS. The Bing app will be sufficient for most users.
Whether users will ultimately adopt these solutions remains unclear. However, Microsoft has already generated a big benefit. Many people just became aware of and exposed to Bing and Edge, some of them for the first time and others for the first time in years.
It can be hard to change habits in solutions like search and browsers. The question for new competitors and those trailing in market share is how to break through the status quo and get a shot at winning over a new user. Microsoft just got that shot on the back of a single product announcement that you can’t even use yet.
Google has the most to lose from this interest. Its 65% browser market share and 92% search market share are tantalizing targets for a number of companies.
Financial Markets are Taking Note
The prospect of breaking up Google’s stranglehold on the nearly $300 billion global search advertising market and broader digital advertising market was noticed by the financial markets. Martin Baccardax from TheStreet reported today.
“Microsoft (MSFT) shares extended gains Wednesday after the tech giant laid out a bullish case for its new AI investment drive and suggested the revamp of its Bing search engine could offer a significant challenge to Google's dominance in the $500 billion digital advertising market.”
Bezinga’s Melanie Schafer added some details showing the herd-like movement of financial analysts favorably updating their stock performance outlook for Microsoft.
“DA Davidson analyst Gil Luria maintained a Buy rating on Microsoft and raised the price target from $280.00 to $325.00. JP Morgan analyst Mark Murphy maintained an Overweight rating and raised the price target from $265 to $305. Mizuho analyst Gregg Moskowitz maintained a Buy rating and raised the price target from $280.00 to $300.00. Jefferies analyst Brent Thill maintained a Buy rating and raised the price target from $275.00 to $310.00.”
Consumer interest in OpenAI’s ChatGPT is substantial, as we outlined in our post analyzing OpenAI website traffic data. OpenAI’s website visits grew 24 times between November 2022 and January 2023.
The vast majority of that increase, and maybe all of it, was directly attributed to the November 30th launch of ChatGPT. This has translated interest into Microsoft’s efforts to integrate the GPT-3 technology behind ChatGPT into some of its core products, including search.
The BingGPT Experience
Kevin Roose of The New York Times had a chance to try out the new BingGPT and updated Edge browser at the Microsoft event. His comments about the solution will likely lead to even more enthusiasm around Microsoft’s stock price prospects while raising new concerns about Google’s previously impenetrable competitive moat.
“I tested the new Bing for a few hours on Tuesday afternoon, and it’s a marked improvement over Google. It’s also an improvement over ChatGPT, which, despite its many capabilities, was never designed to be used as a search engine.
“Microsoft has gotten around some of ChatGPT’s limitations by marrying OpenAI’s language capabilities to Bing’s search function, using a proprietary tool it’s calling Prometheus. The technology works, roughly, by extracting search terms from users’ requests, running those queries through Bing’s search index and then using those search results in combination with its own language model to formulate a response. In both Microsoft’s demos and my own testing, Bing did well at a wide variety of search-related tasks, including creating travel itineraries, brainstorming gift ideas and summarizing books and movie plots.
“Microsoft has also incorporated OpenAI’s technology into Edge, its web browser, as a kind of superpowered writing assistant. Users can now open a panel in Edge, type in a general topic and get an A.I.-generated paragraph, blog post, email or list of ideas written in one of five tones…
“Users can also chat with Edge’s built-in A.I. about any website they’re viewing, asking for summaries or additional information. In one eye-popping demo on Tuesday, a Microsoft executive navigated to the Gap’s website, opened a PDF file with the company’s most recent quarterly financial results and asked Edge to both summarize the key takeaways and create a table comparing the data with the most recent financial results from another clothing company, Lululemon. The A.I. did both, almost instantly.”
Roose outlined several of ChatGPT’s search functionality shortcomings in the article. Reading these without the benefit of a ChatGPT experience might lead you to think Google had nothing to fear from OpenAI before the Bing announcement. However, Hang Jiang came across an interesting question in a Google Opinion Rewards survey which asked, “Based on the example mentioned above, compared with ChatGPT, how much more or less helpful did you find Google Search?”
Google’s Reaction
Google is absolutely thinking about this, and it explains some of the company’s actions this week. First, there was a blog post by Google CEO Sundar Pichai on Monday announcing the new ChatGPT competitor named Bard. That post also included information about a forthcoming API connecting to the LaMDA large language model, which competes with GPT-3.
Earlier today, Google held an event in Paris on the future of search to take on these issues directly. The event included a brief video demonstration of Bard, which looks more like the new BingGPT version than ChatGPT. Google also attempted to reframe the discussion around the future of search by suggesting images and maps will be just as important as conversational interactions. The event came across as underwhelming and not up to the moment that Microsoft and OpenAI shaped.
Google has said it will have a number of new products in the market in the first half of 2023 that will attempt to stave off new competitors such as BingGPT and OpenAI. The market is moving quickly, but habits don’t change quickly. The company may well have time to get its products in place before there is a significant erosion in market share.
However, Google seems to be hoping the market will slow or the conversation will shift. It is not clear the company really understands the moment. That may also mean it doesn’t grok the true meaning of Microsoft’s ChatGPT bounce.
At the same time, Microsoft can definitely squander this opportunity with big-company requirements designed to push multiple products in conjunction that may turn off users. The old Microsoft certainly would have killed the opportunity before it germinated by forcing users into its deep product stack. The new Microsoft seems savvier. It will be interesting to see how long the Edge browser requirement lasts.
One thing appears certain; the intelligent bot wars have truly begun, and the battles are likely to shape big tech competition for years.
The AI tech stack and conversational search are two major game changes. Exciting and slightly terrifying times