Google shares fall sharply after AI chatbot debut stumbles

Shares of Google parent Alphabet were down more than 8 per cent on Wednesday, wiping billions of dollars off its market value, following an error in an artificial intelligence demonstration that drew widespread attention the same day it held an event to announce the integration of the technology into its search and mapping tools.

Earlier this week, Google said it would launch its own chatbot named Bard in an attempt to make up ground lost to rival ChatGPT. However, experts pointed out that Bard had made a factual error in the first video demo of the product online.

An animation shared by Google showed Bard answering a question about new discoveries made through the James Webb Space Telescope, saying it “took the very first pictures of a planet outside of our own solar system”.

Astronomers said this was incorrect, highlighting a larger issue with search powered by AI known as large language models: that they can confidently make factual mistakes and spread misinformation. One astronomer pointed out that problem could stem from AI misinterpreting “ambiguous Nasa press releases that underplayed past history”.

During the event in Paris on Wednesday, Google senior vice-president Prabhakar Raghavan announced incremental new product features, including image-based search and interactive 3D models of some cities including London and Los Angeles, instead of the more sweeping advancements that some had hoped to see from the search giant.

The announcement came in contrast to rival Microsoft’s unveiling of a new version of its Bing search engine on Tuesday that incorporated AI advances including summarising answers to search queries and generating emails and lists, sparking what chief executive Satya Nadella described as a “race” with Google to overhaul online search.

In an interview with Financial Times, Nadella said the advent of AI technologies meant the gross margin of search was “going to drop forever”.

“There is such margin in search, which for us is incremental. For Google it’s not, they have to defend it all,” Nadella added. He referred to the competition against Google as “asymmetric”.

Google has been scrambling to catch up with embedding AI technologies into its consumer products since the recent launch of ChatGPT, which provides text answers to complex questions directly rather than requiring the use of a traditional search engine. Despite its recent announcements, it has yet to roll out…