Gene Munster, a prominent tech analyst, at Deepwater Asset Management has predicted that OpenAI could pose a significant challenge to $Alphabet-A (GOOGL.US)$ in the search business, despite its ties with $Microsoft (MSFT.US)$. Munster's forecast comes on the heels of Apple Inc's (NASDAQ:AAPL) potential partnership with OpenAI.
What Happened: Munster, took to social media platform X, to express his views on OpenAI's potential to disrupt the search business. He acknowledged that OpenAI had not yet announced a search product, but he remained convinced that OpenAI would eventually become a formidable competitor in the search market.
He also noted that OpenAI's 49% ownership by Microsoft could complicate its path into the search business. Despite this, Munster expects OpenAI to make significant announcements by the end of the year.
"I still believe it's a function of time before OpenAI gets more aggressive with search," Munster wrote.
Let me wipe this egg off my face; OpenAI did not announce a search product. That said, while shares of $GOOG breathe a sigh of relief (rallied 2%) I still believe it's a function of time before OpenAI gets more aggressive with search.
The relationship with $MSFT (49% ownership)...— Gene Munster (@munster_gene) May 13, 2024
He pointed out Google's current advantages, including its 25 years of search data, global distribution, and massive infrastructure. However, he still sees OpenAI as a potential rival to Google in the search business.
Why It Matters: Munster's prediction comes at a time when OpenAI is making significant strides in the AI and search sectors. Just days before Munster's tweet, it was reported that OpenAI was on the verge of announcing its AI-powered search product, potentially intensifying its rivalry with Google. This product is an extension of OpenAI's AI-powered chatbot, ChatGPT, and allows it to directly pull information from the web and include citations.
Moreover, Apple is reportedly finalizing a partnership with OpenAI that could bring significant AI features to its devices. This potential partnership is expected to be officially announced at Apple's Worldwide Developers Conference (WWDC) in June. This development could further bolster OpenAI's position as a potential challenger to Google in the search business.
Meanwhile, Google is facing its own challenges, including the unsealing of court documents that revealed the company paid Apple a staggering $20 billion in 2022 to be the default search engine on iOS. This deal is a central point in an ongoing antitrust lawsuit against Google, with regulators alleging that the company has unlawfully monopolized the online search and related advertising market.