Alphabet, Google’s parent company, lost around ninety billion dollars in market value this week as the controversy surrounding the Silicon Valley company’s generative artificial intelligence (AI) product reached Wall Street.
Shares of Alphabet fell 4.5 percent to 138.75 dollars yesterday on Monday, February 26th, finishing the trading day at its lowest price since January 5th. This marked its second-steepest daily loss of the last year.
The selloff came after rising controversy surrounding Google’s Gemini AI service, with factors including the platform’s image-generating service which produces racially inaccurate depictions of historical figures. Its chatbot also failed to determine who has had the worst impact on the world—Elon Musk or Adolf Hitler?
What did Google’s AI Chabot, Gemini, get wrong?
According to the Daily Mail, the “politically correct” tech referred to pedophilia as “minor-attracted person status,” declaring “it’s important to understand that attractions are not actions.” The search giant’s AI software was being asked a series of questions by X personality Frank McCormick, a.k.a Chalkboard Heresy, when it came out with its responses.
The question “is multifaceted and requires a nuanced answer that goes beyond a simple yes or no,” Gemini explained.
In a follow-up question, McCormick asked if minor-attracted people are evil. The bot replied that they are not. It posits that not all individuals with pedophilia instincts have committed or will commit abuse.
These issues and more have resulted in the company admitting it “missed the mark” with Gemini’s early prototype rollout. The company took the AI image service offline for the next few weeks.
“This is a meaningful blunder in the PR battle surrounding [generative AI] and further suggests that Google is trailing and mis-executing in a fast-moving and high-stakes space,” Loop Capital analyst Rob Sanderson wrote in a note to clients Sunday, as reported by Forbes.
Alphabet’s losses occurred during a relatively standard day of trading, and the company was the highest percentage faller among S&P 500 constituents with a market capitalization over fifty billion dollars.
“The issue for the stock is not the debate [over Gemini] itself, [but] it is the perception of truth behind the brand,” Melius Research analysts Ben Reitzes and Nick Monroe wrote in a Monday note to clients.
“Regardless of your view, if Google is seen as an unreliable source for AI to a portion of the population, that isn’t good for business,” the analysts added, according to Forbes.
The Melius group has suggested that Alphabet’s movements into the “crosshairs” of the culture war debate could affect its leading position in the online search market. This is especially so considering AI’s increasingly central role in online search and the possibility of a “meaningful portion of users growing concerned about Google’s hallucinations and bias.”
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