“I want people to know that we made them dance,” said Microsoft CEO Satya Nadella in an interview with the Verge, referring to the company’s competition with Google, led by CEO Sundar Pichai.

Today, both Pichai and Nadella are locking horns as the tech giants fight for AI dominance.  The competition has become so intense that Microsoft embedding OpenAI’s ChatGPT with Bing has made Google announce Bard, a rival to ChatGPT, in just a matter of few weeks.

So far, both CEOs have been bullish on AI and share a mutual respect for each other. In fact, Nadella said Google is an unbelievable company with great talent. “I have a lot of respect for Sundar Pichai and his team.”

However, in the midst of this competition to establish themselves as AI leaders, one among Nadella and Pichai could decide the fate of another. 

Nadella’s vision with Bing

Satya Nadella started his journey in Microsoft back in 1992 and has played a key role in the development and growth of several of Microsoft’s most successful products, including the Windows operating system, the Xbox gaming console, and the Bing search engine.

Nadella took over the helm of Microsoft in 2014, and under his leadership, the tech giant invested USD 1 billion in OpenAI, the creator of ChatGPT.

Prior to his appointment as the CEO, there were speculations that Microsoft would drop Bing and Xbox to focus on their enterprise businesses. 

However, now, Nadella has turned Bing into one of Microsoft’s big guns and is challenging Google in its own game, the search engine space. 

Google, which started out as a search engine, holds more than 90% of the global market share today. However, the emergence of ChatGPT has made Google panic and sent the tech giant into a frenzy.

Nadella is going after Pichai’s cash cow

Nadella’s goal is not limited to enhancing Bing but rather to directly challenge Google and target one of its most profitable sources of income—advertisement.

Google’s ad revenue is in billions and rising year after year. In 2021, Google generated revenues of around USD 256.74 billion, out of which around USD 209.49 billion was derived solely from advertising. Within the ad sphere, search is the most lucrative channel for Google. 

In juxtaposition, Microsoft made around USD 11.59 billion in revenue from search advertising in FY2022. Now, with AI integration, Nadella is eyeing an even bigger share of the ad revenue pie. 

The Redmond-based tech giant is not only embedding the AI model behind ChatGPT with Bing but also with Microsoft Edge, its browser. 

“Today was a day where we brought some more competition to search. Believe me, I’ve been at it for 20 years, and I’ve been waiting for it,” Nadella told the Verge.

Microsoft’s Chief Vice President, Philippe Ockenden, has confessed that every 1% increase in the search advertising market represents a USD 2 billion revenue opportunity for the company’s advertising division.

Within 48 hours of the announcement, more than 1 million people have joined the waitlist for the AI-integrated Bing, Yusuf Mehdi, chief marketing officer at Microsoft, shared in a tweet. Further, the Bing app downloads recorded a ten-fold increase, according to the data presented by data.ai. 

Nadella is not just aiming to capture Google’s ad revenue but is also actively challenging Google’s dominance in the space. Microsoft announced a surprise event on February 7, 2023, at its Redmond headquarters, a day before Google’s planned event on February 8. 

Cracks are appearing at Google 

There is no doubt that Google has been an established leader in the AI order. However, in the past year or so, cracks have finally started to show. Newer firms such as OpenAI and Midjourney released their text-to-image AI models last year. In fact, Stability AI, a much newer company, released an open-source version of its text-to-image model called ‘Stable Diffusion’. 

Google, despite working on a similar model called ‘Imagen’, has not made it open to the public yet.

When it comes to ChatGPT, Google had already worked on similar technologies and had also published a paper in 2021 but refrained from making the technology public due to “reputational risk”.

Further, following the success of ChatGPT, many employees expressed concerns about the company’s intentions with its own AI conversational chatbot, ‘LaMDA’.

To make matters worse for Google, in Fortune’s Brainstorm Tech conference (2022), Senior Vice President–Google Prabhakar Raghavan revealed that nearly 40% of young users between ages 18 and 24 in the US preferred to use ‘TikTok’ or ‘Instagram’ over ‘Google Maps’ or ‘Google Search’ for simpler queries such as searching for a good restaurant nearby.

Additionally, spirited discussions about the accuracy of results produced by Google Search have been going on for some time on platforms such as Reddit and Twitter.

Is Pichai faltering?

The dismal performance of Google in the last few quarters has cast an indubitable shadow over the company’s future under the leadership of Pichai. 

In fact, according to reports, Pichai was criticised by his own employees for the Bard launch fiasco, which wiped out more than USD 100 billion of market capitalisation.

Under Pichai, Google may still be in the lead of the pack in AI; however, the question being asked is, ‘how long?’ In the events that transpired recently, many believe Google has all the resources at its disposal to overcome the adversities it is faced with. 

In fact, speculations about the need for a new CEO at Google are already being discussed on social media platforms.

With ChatGPT integration, Nadella seems to have rocked Google’s boat and put Pichai under immense pressure to steady the ship and ride the storm. Unfortunately, slow profit, layoffs, and cost-cutting measures seem to be making matters all the worse for Google’s CEO.

With Nadella ramping up the pressure on Google, are Pichai’s days at the helm of Google numbered? Only time will tell. However, for Pichai to stay put as Google’s CEO, he will need to turn the tides in Google’s favour quickly.