Google’s reaction to the threat was “panic” as the company earns an estimated $3 billion in annual revenue from the contract with Samsung, according to the report, citing internal messages.
Another $20 billion is tied to a similar Apple contract due for renewal this year, the report added.
Alphabet and Samsung did not immediately respond to Reuters requests for comment.
Google has dominated the search market for decades with a share of more than 80%, but Wall Street fears the company may be falling behind Microsoft in a fast-paced AI race.
Parent Alphabet lost $100 billion in market value on February 8 after its new chatbot, Bard, shared inaccurate information in a promotional video and a company event failed to impress.
At midday Monday, Alphabet shares were trading down 2.6% at $106.02. While Microsoft’s rose 0.7% to $288.16.
“Investors are concerned that Google has become a lazy search monopolist, and the events of the past two months have served as a wake-up call,” said James Cordwell, an analyst at Atlantic Equities.
Cordwell added that the potential costs of making Google Search more competitive than the AI-powered version of Bing could also be a concern.
According to the NYT report, Google is rushing to build a new AI-powered search engine that offers a more personalized experience than its current service, which will also be updated with AI features.