Key Takeaways
- Shares of Google’s parent company, Alphabet, fell sharply after an Apple executive discussed exploring search engine alternatives for iPhones.
- Apple is considering AI-powered search engines to potentially replace Google as the default on its Safari browser.
- This revelation came during testimony in the Justice Department’s antitrust lawsuit against Google.
- In 2022, Google paid Apple $20 billion to maintain its status as the default search engine on Apple devices.
Shares of Google’s parent company, Alphabet Inc., tumbled significantly on Wednesday. The drop, exceeding 9% at one point, followed remarks from a senior Apple executive about the future of search on iPhones.
Eddie Cue, Apple’s senior vice president of services, testified that Apple is “actively looking at” AI-powered search engines. This exploration could lead to Google being replaced as the default search option on Safari, Apple’s web browser, according to the New York Post.
Cue, who reports directly to CEO Tim Cook, made these statements during the Justice Department’s antitrust lawsuit against Google. He noted that Apple has observed a decrease in traditional Safari searches, with more users turning to AI.
He anticipates that AI-driven platforms like OpenAI’s ChatGPT, Perplexity AI, and Anthropic could eventually take over from traditional search engines such as Google. Apple plans to integrate these emerging tools as search options within Safari, though Cue suggested they likely wouldn’t be the default initially, as they still need refinement.
“Before AI came into play, I didn’t see any of the alternatives as serious contenders,” Cue said. “But I think the landscape is changing. There’s now real potential thanks to new players approaching the challenge with fresh perspectives.” Apple has already held preliminary talks with Perplexity.
Apple currently features ChatGPT within Siri and is expected to introduce Google’s own AI tool, Gemini, later this year. Cue mentioned that Apple also looked at AI offerings from Anthropic, DeepSeek, and Elon Musk’s Grok.
In selecting an AI to power Apple Intelligence in iOS 18, Apple evaluated multiple contenders, including Google, in what Cue described as a “bake-off.” He revealed Google submitted a proposal with terms Apple “wouldn’t agree to and didn’t agree to with OpenAI,” leading to the selection of ChatGPT.
Cue also highlighted the rapid pace of technological change, remarking, “You may not need an iPhone 10 years from now as crazy as it sounds.” He believes such shifts create opportunities for new competitors in the market.
The executive’s testimony also shed light on a massive payment: Google paid Apple $20 billion in 2022 to remain the default search engine on Safari across iPhones, iPads, and Macs. This figure, disclosed in court documents, is a central point in the Justice Department’s lawsuit.
The DOJ argues that Google’s substantial payments to secure default status stifle competition, making it hard for rival search engines to gain traction. Following Cue’s testimony, not only did Alphabet’s stock drop, but Apple’s shares also fell by up to 2.5%, and the broader S&P 500 Index briefly turned negative.
