On May 7, 2025, Alphabet's stock experienced a notable decline of 6% following revelations that Apple is contemplating the integration of artificial intelligence (AI) search functionality into its Safari web browser. This potential move could significantly challenge Google's long-standing dominance in the search market.
The drop in Alphabet's stock coincided with statements made by Eddy Cue, Apple's Senior Vice President of Services, during ongoing antitrust proceedings against Google. Cue revealed that search usage in Safari had declined for the first time in 22 years, emphasizing that "this has never happened in the past 22 years." He attributed this decline to the increasing popularity of AI technologies.
As Apple explores the possibility of enhancing Safari with AI-based search functions, concerns are mounting regarding Alphabet's future search revenues. If Apple successfully reduces its reliance on Google’s search system, it could have serious financial repercussions for Alphabet, which relies heavily on search-related income. Cue's comments raised alarms among investors, highlighting the potential threat to Alphabet's revenue streams.
Reportedly, Apple is considering alternative search providers, including Perplexity and Anthropic, which could further diminish Google's stronghold in the search engine sector. Cue expressed his belief that AI-based search systems, such as those developed by OpenAI, Perplexity AI Inc., and Anthropic PBC, are poised to replace traditional search engines like Google in the near future.
Currently, Apple has integrated ChatGPT from OpenAI into Siri and is expected to include Gemini, another Google AI search product, later in 2025. Cue mentioned that for AI developers to enhance their offerings, improvements to search indexes are essential. He noted, "even if this does not happen quickly, they have other features that are so much better that people will switch to them." This statement underscores the competitive landscape that could emerge in the coming years.
However, the implications of these developments extend beyond just Apple and Google. The rise of AI technologies is contributing to an overall reduction in web traffic for sites that typically gain visitors through search engines. This decline poses a significant threat to many independent companies that rely on search engine traffic for their business.
During the antitrust proceedings, Cue acknowledged the severity of the situation, admitting, "I have not been sleeping well" due to the potential loss of substantial revenue from Google's annual payment of approximately $20 billion to Apple for maintaining its status as the default search engine in Safari. This financial arrangement has been a cornerstone of Apple's revenue model, and any shift away from Google could have dire consequences.
Pandu Nayak, Vice President of Google Search, addressed concerns from independent website owners, stating that he could not make any guarantees regarding improvements in the current situation. This uncertainty has left many in the industry anxious about the future viability of their online presence.
The potential integration of AI into Safari represents a pivotal moment not only for Apple and Google but also for the broader tech landscape. As AI technologies continue to evolve, they could reshape how users interact with information online, leading to a paradigm shift in search behavior.
Investors are closely monitoring these developments, as the implications for Alphabet's financial health could be profound. The company's stock performance is a reflection of investor sentiment regarding its ability to maintain its market position amidst these emerging challenges.
In conclusion, the landscape of search is on the brink of transformation, driven by advancements in AI and changing consumer preferences. As Apple considers its next steps, the ramifications for Google and the overall search market will be significant, marking a new chapter in the ongoing rivalry between these tech giants.
