Key Takeaways
- Apple suggests its lucrative US$20 billion Google search deal may become obsolete due to AI.
- The company is exploring AI services like ChatGPT as future search alternatives in its Safari browser.
- This argument surfaced during a major US antitrust trial that could dismantle the Apple-Google partnership.
- Despite hinting at a future without the deal, Apple is keen to preserve its current multi-billion dollar arrangement with Google.
- The Google partnership is a significant contributor to Apple’s growing services revenue, a key area for the company.
Apple is making a surprising argument to try and save its massive US$20 billion-a-year search deal with Google. The tech giant claims that this crucial partnership might not even be necessary in the future.
Eddy Cue, Apple’s head of services, presented this view during testimony at the U.S. Justice Department’s antitrust trial against Google. This trial puts the lucrative deal at risk.
Currently, Apple gets that hefty sum for making Google the default search engine on iPhones and other devices. But Cue painted a picture of a rapidly changing tech world.
He revealed Apple is already planning to reshape its Safari web browser around artificial intelligence services. Think tools like OpenAI’s ChatGPT, Perplexity AI, and Claude becoming search alternatives.
User habits are also shifting. Cue mentioned that for the first time, Google search queries on Apple devices dropped in April, as more people turn to AI for answers.
“Technology shifts create these opportunities,” Cue stated, adding that AI providers could become Safari search options. Yet, it’s clear Apple would prefer not to lose the Google arrangement right now.
The uncertainty has rattled investors, with shares of Google’s parent, Alphabet, and Apple both declining, as reported by Bloomberg. Google earns billions from searches on Apple’s vast user base.
Cue’s testimony aimed to show that with new AI alternatives emerging, the Google deal isn’t stifling competition, potentially persuading the judge to leave the agreement intact.
He even made a striking comment: “You may not need an iPhone 10 years from now, as crazy as it sounds.”
This isn’t new for Apple; the company has a history of making surprising public statements during legal battles to strengthen its case.
The Google money is a big boost to Apple’s services division, a key growth engine that brought in a record US$26.6 billion last quarter.
Cue admitted he’s “lost sleep” over potentially losing the Google deal and still believes Google should be the preferred search option for now, even as new services are added.
However, Apple also sees potential new income from AI. These AI systems could one day share revenue with Apple, similar to how the App Store works.
Apple is already integrating AI, using ChatGPT for some Siri functions and planning to add Google’s Gemini AI as another option soon. This hints at a future where Apple could profit from many AI providers, not just an exclusive search partner.
