Shares of Alphabet took a hit on Wednesday after Apple’s senior vice president of services, Eddy Cue, signaled a significant shift in the future of online search.
Cue stated during federal court testimony that artificial intelligence (AI)-powered search engines could soon replace traditional search tools like Google, a remark that rattled investors and cast fresh doubt on the long-standing partnership between the two companies.
Speaking in a US District Court in Washington during the Department of Justice’s antitrust case against Google’s parent company, Alphabet, Cue revealed that Apple is exploring the integration of AI-driven search tools such as OpenAI, Anthropic, and Perplexity into its Safari browser.
The testimony forms part of the government’s broader effort to scrutinize Google’s alleged monopolistic behavior in the digital advertising and search engine markets.
Alphabet shares down more than 8%
Alphabet shares plunged more than 8% in response to the comments and ongoing legal pressure, while Apple stock dipped around 2% during the same trading session.
The case is now entering a critical phase as the court considers potential penalties against Google, which was previously ruled to have violated antitrust laws by illegally dominating advertising technology markets.
Central to the trial is Google’s lucrative practice of paying platform owners — including Apple — to remain the default search engine on their devices.
Testimony has revealed that Google paid Apple as much as $20 billion annually as of 2022 to maintain its default status on Safari, a deal that benefits both companies by channeling high search traffic through Google’s ad-powered engine and returning a substantial revenue share to Apple.
However, Cue’s testimony hinted at shifting dynamics.
He acknowledged concerns about the stability of the partnership and admitted he has “lost sleep” over the potential loss of revenue if Google is no longer the default search option.
At the same time, he affirmed that Google should stay as the default engine for now, citing its overall search quality.
Cue disclosed that for the first time, Safari experienced a drop in search activity this April, which he attributed to consumers increasingly turning to AI tools for their queries.
These emerging platforms promise more conversational, accurate, and context-aware answers than traditional keyword-based search engines — a potential game-changer for how users interact with the web.
Apple’s openness to adopting multiple AI search options within Safari suggests it may soon break away from its exclusive relationship with Google.
If implemented, this move could disrupt Google’s dominance in mobile search, impact advertising revenue, and create new competitive dynamics in the evolving AI search engine market.
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