Shares of Alphabet, the parent company of Google, plunged more than 7% on May 7, 2025, following alarming remarks made by Apple executive Eddy Cue during an antitrust trial. Cue's testimony indicated that Google's search traffic on Apple products had fallen, attributing the decline to the rising popularity of artificial intelligence (AI) alternatives such as ChatGPT and Perplexity.
In a court statement reported by MLex, Cue noted, "That has never happened in 20 years," highlighting the unprecedented nature of this shift in user behavior. The fallout from his comments was significant, wiping out approximately $140 billion from Google's market capitalization since the previous day's trading close.
Google has long enjoyed a dominant position in the online search market, controlling around 90% of global search traffic. However, the landscape is shifting as AI-driven search tools gain traction. Cue's remarks came as part of a broader discussion regarding Google's business practices, which have been scrutinized under antitrust laws.
Apple is reportedly considering integrating AI search capabilities into its Safari browser, which could pose a serious threat to Google's long-standing dominance. This potential move could disrupt Google's lucrative revenue-sharing agreement with Apple, where Google pays an estimated $20 billion annually to remain the default search engine on Safari. This partnership accounts for about 36% of Google's ad revenue generated through Safari.
During the trial, Cue also indicated that Apple would add more AI search options to its browser in the coming year, stating, "over the coming year we will add other (AI) choices to the search engine choice in the browser, because I think those products are getting better and better." This statement further fueled concerns about Google's future in the search market, as it faces new competition from AI-driven platforms.
Market analysts have pointed to the implications of losing exclusivity on Apple devices. As the U.S. Justice Department proposes banning revenue-sharing deals like Google's with Apple, the potential for a significant shift in advertising dollars looms. If users increasingly turn to AI alternatives, advertisers may reconsider their reliance on Google, which has enjoyed a near-monopoly for years.
In response to the changing landscape, Google has been investing heavily in AI initiatives, attempting to bolster its search capabilities. Earlier this year, the tech giant introduced an "AI mode" on its search page and expanded AI Overviews for users across over 100 countries. Despite being perceived as an underdog in the AI race, especially after the rapid rise of ChatGPT in late 2022, Google is determined to maintain its competitive edge.
CEO Sundar Pichai expressed hopes of striking a deal with Apple to integrate Google's Gemini AI technology into new devices by mid-2025. However, as Apple moves towards embracing AI in its own search offerings, the stakes have never been higher for Google.
As the trial unfolds, U.S. Judge Amit Mehta is expected to make a ruling in August regarding Google's business practices, which could have far-reaching consequences for the company. The government has urged the court to consider forcing Google to divest its Chrome browser or to end its revenue-sharing agreements with Apple and other partners.
The implications of these decisions could reshape the online search landscape as we know it. With AI alternatives rapidly gaining traction, the traditional search model may soon be a relic of the past. Analysts like Gene Munster of Deepwater Asset Management argue that the search paradigm is shifting away from the familiar blue-link results pages that have dominated for the last 25 years.
"Search is shifting away from the traditional blue-link results page that we've loved for the past 25 years, to a simplified artificial intelligence impact on search," Munster noted in a recent email. He emphasized that Google's monetization model for sponsored ads will need to be rethought in light of these changes.
As Apple continues to explore AI integration into its products, the competition between traditional search engines and AI-driven platforms is likely to intensify. The future of search may hinge on how well established players like Google can adapt to this new reality.
In conclusion, the ongoing antitrust trial and the potential integration of AI into Apple's Safari browser mark a pivotal moment for the online search industry. With Google's dominance under threat, the next few months will be critical in determining the future landscape of how users access information online. As AI continues to evolve, its impact on search could redefine user expectations and reshape the entire industry.
