Alphabet's shares made a notable recovery on Thursday, May 8, 2025, partially offsetting earlier losses sparked by comments from Eddy Cue, Apple's services chief. Cue suggested that search engines powered by artificial intelligence might eventually replace traditional search engines like Google, according to a report by Bloomberg. However, Alphabet quickly refuted these claims, asserting that they are experiencing positive momentum in their search operations, including a rise in overall searches originating from Apple devices.
During his testimony at a federal court in Washington, Cue indicated that Apple would likely continue its existing search engine agreements with Google. This testimony was part of a larger case brought by the U.S. Department of Justice against Alphabet, which alleges that Google has maintained an illegal monopoly in the internet search technology market. The court is currently evaluating potential remedies or actions the company may face.
The case primarily focuses on Google's alleged practices of making significant payments to platform providers, such as Apple, to ensure that Google remains the default search engine on their devices. According to evidence presented in court, Google paid Apple approximately $20 billion in 2022 to maintain this arrangement. This partnership has proven lucrative for both companies, as it generates substantial revenue for Apple while helping Google attract more users and increase search volume.
However, the implications of Cue's statements raised questions about the long-standing relationship between Apple and Google. Despite his comments, Cue emphasized his belief that Google should remain the default search engine on Safari. He expressed significant concern about the potential revenue losses that could arise from any changes in their partnership.
Adding to the complexity, Cue noted a decline in search operations via Safari for the first time in April, attributing this drop to an increasing reliance on AI tools among users. This trend could signal a shift in how consumers interact with search engines, posing a potential challenge to Google's dominance in the market.
On the trading front, Alphabet's shares rose by 1.7% to $159.9 at 6:06 PM Mecca time, indicating a recovery from the previous day's losses which had seen the stock drop over 7% amid concerns related to the ongoing legal battle.
The outcome of the lawsuit could have far-reaching consequences for Google's highly profitable advertising operations. As the court deliberates on potential remedies, the stakes are high for both Alphabet and Apple, with the relationship between the two tech giants hanging in the balance.
In a broader context, the case against Google reflects growing scrutiny over the power of major tech companies and their impact on competition in the digital marketplace. As regulators worldwide increase their focus on antitrust issues, the outcome of this case could set a precedent for how similar cases are handled in the future.
As the legal proceedings continue, both companies are likely to navigate a challenging landscape where public perception and regulatory pressures could significantly influence their operational strategies. Investors and market analysts will be closely monitoring the developments in this case, as they could reshape the competitive dynamics in the technology sector.
