Microsoft packs Bing search engine, Edge browser with AI in big challenge to Google

Microsoft is revamping its Bing search engine and Edge Web browser with artificial intelligence, the company said on Tuesday, signaling its ambition to retake the lead in consumer technology markets where it has fallen behind.

The maker of the Windows operating system is staking its future on AI through billions of dollars of investment as it directly challenges Alphabet Inc's (GOOGL.O) Google, which for years has outpaced Microsoft in search and browser technology.

Now, Microsoft is rolling out an intelligent chatbot to live alongside Bing's search results, putting AI that can summarize web pages, synthesize disparate sources, even compose emails and translate them into more consumers' hands. Microsoft expects every percentage point of share it gains will bring in another $2 billion in search advertising revenue.

Working with the startup OpenAI, Microsoft is aiming to leapfrog its Silicon Valley rival and potentially claim vast returns from tools generally that speed up content creation, automating tasks, if not jobs themselves. That would affect products for business, such as the cloud-computing and collaboration tools Microsoft sells, as well as the consumer internet.

"This technology is going to reshape pretty much every software category," Microsoft Chief Executive Satya Nadella told reporters in a briefing at the company's headquarters in Redmond, Washington.

The company's share of search so far is about an estimated tenth of the market. Still, many investors see new technology as a win for all players. Microsoft's stock closed 4.2% higher on Tuesday, while Alphabet gained 4.6%.

(With Reuters inputs)