Key Takeaways
- Alphabet and Apple stock prices fell following news about potential AI search integration in Apple’s Safari browser.
- Apple’s services chief, Eddy Cue, reportedly suggested AI search engines could replace traditional ones like Google.
- Apple may consider adding AI search options from OpenAI, Perplexity, and Anthropic to Safari.
- Cue’s comments were made during testimony in the Justice Department’s antitrust lawsuit against Google.
- The lawsuit scrutinizes Google’s payments to Apple for being the default search engine, impacting both companies’ revenues.
- Safari searches reportedly declined for the first time in April, which Cue attributed to rising AI usage.
Stock prices for Alphabet, Google’s parent company, and Apple experienced a downturn on Wednesday. This followed remarks from Apple’s services chief, Eddy Cue, regarding the future of internet search.
Cue suggested that artificial intelligence search engines are likely to supersede standard search engines such as Google, according to a CNBC report that cited statements made during legal testimony.
The Apple executive also indicated that the company might integrate AI services from OpenAI, Perplexity, and Anthropic as alternative search options within its Safari browser in the future.
These comments emerged while Cue was testifying in a Washington federal court. He was a witness in the Justice Department’s ongoing antitrust lawsuit against Alphabet, scrutinizing Google’s market dominance, particularly in advertising technology.
A significant focus of the case is Google’s practice of paying platform providers, like Apple, to establish Google as the default search engine. Last year, a U.S. District Court judge ruled Google had illegally dominated ad tech markets, and the current phase aims to determine appropriate penalties.
This lawsuit and any resulting actions pose a considerable threat to Google’s lucrative advertising revenue, causing Alphabet shares to fall by over 7% on Wednesday.
However, Apple is also potentially impacted. The iPhone maker receives billions of dollars annually from Google—as much as $20 billion in 2022, according to trial testimony—for this default search engine status. This arrangement is highly profitable for Apple and a key way for Google to maintain search volume. Apple’s shares consequently dropped 2%.
Cue’s testimony casts doubt on the long-term viability of this Apple-Google relationship. While he stated a personal preference for Google to remain Safari’s default search, citing concerns over lost revenue if the deal ends, the future seems less certain, as detailed in the CNBC article.
Further underscoring the shifting landscape, Cue revealed that searches on Safari declined for the very first time in April. He attributed this decrease to the increasing adoption and use of AI by consumers, the report noted.
