Shares of Alphabet, Google’s parent company, fell more than 3% in early trading on Monday, February 2, 2026, after a report sparked concerns that its core search engine could lose market share to AI-powered rivals, including Microsoft’s Bing.
Last month, Google employees learned that Samsung was considering making Bing the default search engine on its devices instead of Google’s, prompting what the New York Times described as “panic” inside the company, according to internal messages and documents.
In an effort to address the heightened competition, Google is reportedly developing a new AI-powered search engine called Project “Magi.” The company, which reportedly has about 160 people working on the project, aims to change the way results appear in Google Search and will include an AI chat tool available to answer questions. The project is expected to be unveiled to the public next month, according to the report.
Google spokesperson Lara Levin said in a statement that the company has been using AI for years to “improve the quality of our results” and “offer entirely new ways to search,” including a feature rolled out last year that lets users search by combining images and words.
“We’ve done so in a responsible and helpful way that maintains the high bar we set for delivering quality information,” Levin said. “Not every brainstorm deck or product idea leads to a launch, but as we’ve said before, we’re excited about bringing new AI-powered features to Search, and will share more details soon.”
Samsung did not immediately respond to a request for comment.
Google’s Declining Search Share
Google’s search engine has dominated the market for two decades, but the viral success of ChatGPT appeared to put the company on defense. According to Statcounter, Google’s global search share dipped below 90% in late 2024 and has hovered in the high 89% range for most of 2025, except for February, where it slightly rebounded to 90.15%. This marks the first time Google’s share has fallen below 90% since 2015.
The shift signals that search is becoming more conversational, summarized, and increasingly distributed across platforms. Bing, Yandex, and AI-native tools like ChatGPT Search are gaining traction.
AI Competition and Market Response
Microsoft has invested in and partnered with OpenAI, the company behind ChatGPT, to deploy similar technology in Bing and other productivity tools. Other tech companies, including Meta, Baidu and IBM, as well as a slew of startups, are racing to develop and deploy AI-powered tools.
An Apple executive reportedly believes AI search engines could replace conventional search engines, a statement that contributed to a $200 billion drop in Google’s stock value in early February 2025. Alphabet’s stock was trading at $344.90 as of February 2, 2026, down 1.88% for the day.
Google was criticized after a demo of its AI chatbot, Bard, provided an inaccurate response to a question about a telescope, causing shares of Alphabet to fall 7.7% and wiping $100 billion off its market value. Microsoft’s Bing AI demo was also called out for several errors, including making up information about certain products.
Google’s Response and Future Outlook
In March, Google began opening up access to Bard, its new AI chatbot tool that directly competes with ChatGPT. At an event in February, a Google executive said the company will bring “the magic of generative AI” directly into its core search product.
Google and Alphabet CEO Sundar Pichai stressed the need for companies to “be responsible in each step along the way” as they build and release AI tools, allowing time for “user feedback” and developing “more robust safety layers” before deploying more capable models.
Pichai believes that AI tools will ultimately have broad impacts on businesses, professions and society, stating, “This represents going to impact every product across every company and so that’s, that’s why I think it’s a very, very profound technology. And so, we are just in early days.”
Despite concerns, Forbes reported in May 2025 that Google possesses substantial strategic advantages that will likely enable it to maintain search dominance through the AI revolution.
