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OpenAI announces a search engine called SearchGPT; Alphabet shares dip

Hayden Field @haydenfield
Key Points
  • OpenAI announced a prototype of its SearchGPT search engine on Thursday.
  • The company says it aims to give users “fast and timely answers with clear and relevant sources.”
  • The AI-powered search engine could ramp up pressure on Google.

OpenAI on Thursday announced a prototype of its search engine, called SearchGPT, which aims to give users "fast and timely answers with clear and relevant sources."

The company said it eventually plans to integrate the tool, which is currently being tested with a small group of users, into its ChatGPT chatbot.

The rollout could have implications for Google and its dominant search engine. Since the launch of ChatGPT in November 2022, Alphabet investors have been concerned that OpenAI could take market share from Google in search by giving consumers new ways to seek information online.

With this prototype, OpenAI is testing the waters for doing just that, promising users the chance to "search in a more natural, intuitive way" and ask follow-up questions "just like you would in a conversation."

"We think there is room to make search much better than it is today," OpenAI CEO Sam Altman wrote Thursday in a post on X.

Alphabet shares fell more than 3% on Thursday to close at $167.28, while the Nasdaq was down less than 1%.

In May, Google launched  AI Overview, which CEO  Sundar Pichai  called the biggest change in search in 25 years, to a limited audience, allowing users to see a summary of answers to queries at the very top of Google Search.

Though Google had been working on AI Overview for more than a year, public criticism mounted after   users quickly noticed that queries returned nonsensical or inaccurate results within the AI feature — without any way to opt out.

"Google has been kind of shaking in their boots a little bit since this stuff first popped off," said Daniel Faggella, founder and head of research at Emerj Artificial Intelligence Research, referring to generative artificial intelligence. "We haven't seem their company crumble in the interim, but we have seen them kind of fumble."

The SearchGPT announcement follows OpenAI's launch last Thursday of a new  AI  model, "GPT-4o mini." The new model is an offshoot of GPT-4o, the startup's fastest and most powerful model to date, which it launched in May during a  livestreamed event with executives.

OpenAI, backed by  Microsoft, has been valued at more than $80 billion by investors. The company, founded in 2015, is under pressure to stay on top of the generative AI market while finding ways to make money as it spends massive sums on processors and infrastructure to build and train its models.

Last Month, OpenAI announced the hiring of two top executives as well as a partnership with  Apple  that includes a ChatGPT-Siri integration. Sarah Friar, previously CEO of Nextdoor and finance chief at Square, joined as chief financial officer, and Kevin Weil, an ex-president at  Planet Labs and former senior vice president at Twitter and a vice president at Facebook and Instagram, joined as chief product officer.

OpenAI is bolstering its C-suite as its large language models gain importance across the tech sector and as competition rapidly emerges in the burgeoning generative AI market.

Both OpenAI's new mini AI model and the prototype of SearchGPT are also part of the company's push to be at the forefront of "multimodality," or the ability to offer a wide range of types of AI-generated media, like text, images, audio, video and search, inside one tool: ChatGPT.

For SearchGPT, OpenAI's blog post said the tool's visual results will lead to "richer understanding" for users.

Last year, OpenAI Chief Operating Officer Brad Lightcap  told CNBC, "The world is multimodal." He added that as humans "engage with the world, we see things, we hear things, we say things," so limiting interactions to text is insufficient.

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