Roth MKM Managing Director Rohit Kulkarni joins Yahoo Finance Live to discuss Samsung’s decision to consider Microsoft’s AI-powered Bing to replace Google Search for all of its devices, while also commenting on Google’s position in the tech landscape amid artificial intelligence trends.
Video Transcript
INES FERRE: As Google races to develop an AI-powered search engine, Samsung is reportedly considering dropping Google as the default search engine, and replacing it with Microsoft’s Bing. This is according to “The New York Times.”
Let’s discuss what this means for the future of Google and the tech industry with Roth MKM Managing Director, Rohit Kulkarni. Rohit, thanks so much for joining us. We’re looking at shares of Alphabet, which are down right now. So what would the impact to Google be if Samsung pairs up with Microsoft’s Bing?
ROHIT KULKARNI: Oh, hey. Thanks for having me. I think the impact on Google is less material if Samsung decides to move away from Google. It’s probably a single-digit billion dollars, less than 2% of revenues. But I think the perception, the sentiment impact, which is what showcasing in the stock right now, that’s more important.
What happens if Apple starts to negotiate or renegotiate the contract, which they have similar to what Samsung has? What happens if other companies start to do that? Say Firefox, Mozilla, and so on and so forth where Google search has been the primary gateway to all browsers across mobile and desktop. So that’s where the big debate is. And that’s what’s being kind of priced into the stock via lower or a more negative sentiment I feel.
DAVE BRIGGS: Rohit, do you expect Apple to do so?
ROHIT KULKARNI: It feels highly unlikely in the near term. At the end of the day, if I were Apple, I am most worried about my users and my consumers experience. What gives them the best experience right now. And whether there is an experimental change into the way people search on the internet through a chat type interface, that remains to be seen. That’s probably several quarters, if not several years out. But I think in the near term, I feel Apple and Google, the relationship is pretty tight. And should remain tight. Perhaps there are some economics that could change that could, again go back to Google’s sentiment. But I feel that’s the biggest debate. And that’s the multi-billion dollar question.
DAVE BRIGGS: Keyword you use there is “perception.” And there’s a perception industry why the Google is just behind the eight ball when it comes to artificial intelligence. Most notably to Microsoft because of what they have going with chat. Is that perception reality?
ROHIT KULKARNI: In my opinion, and here in Silicon Valley, what I would say is Google has always been regarded as the leader in AI. They have been the forefront of AI research for probably several years. Even before we heard of ChatGPT. Before open AI started what they were doing right now. The core technology, the core research on which ChatGPT is based, was in a research paper that Google published maybe seven or eight years back.
So the point is I feel Google remains the leader in AI. The perception has changed simply because they haven’t unlocked direct to consumer use cases, direct to consumer apps that are sexy and cool for people to tinker with like ChatGPT has. And that’s where they are behind this PR campaign that probably they need to be more aggressive with. Yesterday’s interview with the CEO was OK. I think they can definitely do better I would say.
INES FERRE: So is this a PR campaign that they have to go through? I mean, so you’re saying they’re a leader. They’ve got the technology. And this is basically a PR campaign. So what we’re seeing with Samsung– said another way, what we’re seeing with Samsung and the possibility of Microsoft Bing, is this sort of a negotiation tactic perhaps?
ROHIT KULKARNI: So two things there in my opinion. One is what Samsung hopes to achieve. In my opinion, all they want to achieve probably are better unit economics, better treatment, and better relationship with Google. They have been with Google and Android for more than 10 years. They’ve had this love-hate relationship with their own Samsung’s own AI efforts, their own chat efforts, their own assistant efforts. So I think at this point, all they need is a little bit of extra love from Google, be it a slightly better relationship, better economics, first pass at new AI efforts that come from Google. That’s one.
And then when it comes to Google’s own PR, I feel they are behind the eight ball, as you just said, is what products can they directly bring to market with exclusively AI-first, native AI applications? And let consumers play around with them. It could be image generation. It could be video generation. It could be chat. It could be a lot of those things. I think they just need to kind of, I would say, unlock their AI kimono in a way that people get confidence that Google is actually the leader in AI research and products. Right now, that’s on shaky grounds.
DAVE BRIGGS: You’ve got to buy on Google, on Meta, on Amazon. Is that largely on the AI story? Is there’s something else and the macro that bonds them together?
ROHIT KULKARNI: Again, I don’t have a macro crystal ball. If we are heading into a recession, then probably very few companies or their stock prices work in the way people want them to work. But having said that, these are the three kind of pillars of AI research in a way that they have the data, they have the consumer behavior, and understanding of shaping consumer behavior in a way that not many companies have. So they have– I think AI is definitely going to be unlocking new use cases, new ways for them to make money new ways for them to change consumer behavior. And those three companies, definitely there is an AI bend to it.
Again, each of those companies have their own issues going on. But I would say if asked, what is my order right now? I would say all is equal. Amazon, then Google, and then Facebook in terms of preference of the mega caps.
INES FERRE: And I’m sure we’ll be hearing much more about AI and these mega caps. Rohit Kulkarni, thanks so much for joining us.
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