Thirty years ago, Microsoft introduced the Windows key to the keyboard, providing a shortcut to activate the menu in the Windows OS. Yesterday, Microsoft announced the addition of a new key, the ‘Copilot,’ representing its AI assistant.
Microsoft has been proactively incorporating AI consumer functionalities, especially since the rise of ChatGPT. The company integrated Copilot into Bing, presenting search results and answers in coherent text rather than a mere string of links. Furthermore, Copilot has been added to the Microsoft 365 suite, including Word, PowerPoint, and Excel, enabling users to create text, images, or engaging slides directly within these applications.
The introduction of a dedicated shortcut key for Copilot underscores AI’s growing importance in Microsoft’s strategy. We can anticipate the rollout of more AI-driven products in the near future.
Whether users will adopt it remains a question. Launching new technology is one thing, but its success is measured by the number of users embracing it. I believe that Microsoft 365 Copilot will see better adoption than Bing Copilot, mainly due to its larger and more dedicated user base. It’s easier to introduce enhancements in an application that users already utilize regularly.
Investors, including Nvidia and Jeff Bezos, have invested in Perplexity AI, valuing it at around $520 million. The company aims to revolutionize search, as the CEO stated: ‘If you can directly answer someone’s question, there’s no need for those 10 blue links.’ This approach, similar to Bing’s, attempts to challenge Google Search’s market dominance, which has been an elusive goal for many.
Perplexity’s website and mobile web garnered 52.7 million visits, as reported by Similarweb. However, these figures still fall short in comparison to Bing’s 1.3 billion and Google’s 83.8 billion visits.
Google Search’s moat remains strong, and in my opinion, it does not need to create Bard to stay competitive. Previously, I discussed how a new competing product must be 10 times better than the existing one to incentivize users to switch. Personally, I don’t find that Bing or Perplexity currently offer that 10x difference.
Google seems to be taking a step back, as it announced that starting Thursday, it will begin a limited test restricting cookies for 1% of its Chrome browser users. This move is in response to increasing calls for user privacy.
This change could potentially alter the effectiveness of advertising, mirroring the situation when Apple’s privacy measures prevented Facebook from tracking its users, thereby impacting ad targeting.
The key difference is that Google controls the pace of implementation and has developed alternative software for advertisers to target audiences. Therefore, the transition might not be as abrupt as the one Facebook experienced.
Stratechery has highlighted a significant potential for Google in this AI era: it is arguably the best-positioned company to create a digital AI assistant for everyone. This advantage stems from its access to extensive personal data. Google knows who we meet (through Calendar), who we communicate with (via Gmail), where we go (using Google Maps), what information we seek (through Google Search), what apps we use (on Android), and what we watch (on YouTube). If Google can develop a truly personalized digital AI assistant that manages a large aspect of our lives, its impact could be tremendous.
We should not forget Google’s hardware assets, including the Pixel series of smartphones and tablets. These devices could complete a user ecosystem akin to what Apple has achieved. Therefore, even though Microsoft appears to be leading in the AI race, it would be premature to discount Google’s potential.
