Apple's recent announcement to integrate AI search options into its Safari browser is sending shockwaves through the tech industry, particularly impacting Google, the advertising giant that relies heavily on iPhone users for its search engine traffic. This strategic move comes as a direct challenge to Google's dominance in the online search market and has already resulted in a substantial decline in Alphabet's stock, which fell by 7.51%, translating to a staggering loss of over $150 billion in market capitalization.
The news broke on May 8, 2025, following testimony from Eddy Cue, Apple’s Senior Vice President of Services, during an antitrust trial in Washington. Cue revealed that Safari experienced its first decline in search volume in April 2025, attributing this shift to users increasingly opting for AI-driven search solutions. "Users are shifting their preferences toward AI, which is impacting traditional search volumes," Cue stated. This shift is seen as a precursor to a broader transformation in how users interact with search engines.
As of May 7, 2025, Apple's stock also saw a slight dip, closing down 1.1%. The implications of Apple's move are significant, especially considering that Google pays approximately $20 billion annually to remain the default search engine on Safari. This arrangement accounts for about 36% of Google's search ad revenue derived from Safari, making it a lucrative partnership for both companies.
In response to the evolving landscape, Google has claimed that its overall search queries are on the rise, including those originating from Apple devices. A spokesperson for Google remarked, "Users are finding Google Search more useful with an increasing number of queries, and they are using it for new things in new ways." This assertion, however, stands in contrast to the data presented by Apple, indicating a potential disconnect in how both companies interpret user engagement.
The U.S. Department of Justice has proposed measures that could disrupt Google's ability to maintain its position as the default search engine, including a ban on paying for this status. Analysts like Gil Luria from D.A. Davidson have warned that losing this default status could have dire consequences for Google. "The loss of monopoly status at Apple would severely impact Google, even without additional interventions," Luria stated. With Google currently holding nearly 90% of the search market share, any viable alternatives could prompt advertisers to shift their budgets away from Google.
Moreover, Google has been actively investing in AI technologies to bolster its competitive edge following the explosive popularity of AI models like ChatGPT, which debuted in late 2022. In an effort to retain users, Google introduced an AI mode on its search page earlier this year and expanded its AI Overviews feature to over 100 countries. This feature provides summarized information above traditional search results, which has been integrated with advertising to enhance revenue.
Sundar Pichai, CEO of Google, expressed hope for a potential agreement with Apple by mid-2025 to integrate its Gemini AI technology into upcoming iPhones. During the antitrust trial, Pichai testified about various agreements with Apple, Samsung, AT&T, and Verizon that help maintain Google's default search engine status across mobile devices. He indicated that discussions with Apple’s CEO, Tim Cook, regarding the integration of Gemini had taken place last year.
On the same day as Cue's testimony, he announced that Apple plans to introduce additional AI search providers, including OpenAI and Perplexity, to enhance the search capabilities on Safari. This move signals a significant shift toward integrating generative AI search platforms, which have gained considerable traction in recent months. Yory Wurmser, a principal analyst at eMarketer, noted, "Apple's plans highlight how far generative search platforms like ChatGPT and Perplexity have developed."
ChatGPT, for instance, reported over 1 billion weekly web searches for its search feature in April 2025, showcasing the growing user base and potential competition for traditional search engines. As of February 2025, the AI chatbot had over 400 million weekly active users, demonstrating its impact on the search landscape.
As Apple prepares to implement these changes, the stakes are high. The company currently benefits significantly from its partnership with Google, which generates around $20 billion annually. However, if search volumes on Safari continue to decline, Apple risks losing a substantial revenue stream. The pressure from regulatory bodies could also compel Apple to explore alternative partnerships with other search engine operators to mitigate potential losses from its lucrative deal with Google.
In the ongoing antitrust litigation, the U.S. government and a coalition of state attorneys general are pushing for remedies that include requiring Google to divest its Chrome web browser and cease paying to be the default search engine. The outcome of this case could fundamentally alter how users access information online and challenge Google's longstanding dominance in the search sector.
During his testimony, Pichai argued against the proposed data-sharing agreements, stating that such requirements would diminish Google's motivation to invest in research and development. He described the notion of sharing search index data as "unusual," equating it to relinquishing intellectual property rights tied to search technology. "Reverse engineering and rebuilding Google Search from the outside would be relatively easy," Pichai warned, emphasizing the potential consequences for innovation within the company.
As the tech landscape continues to evolve with the integration of AI into search engines, the battle between Apple and Google is set to intensify. Both companies are at a crossroads, with Apple positioning itself to disrupt the status quo, while Google seeks to maintain its grip on a market it has dominated for over two decades. The future of search is not just about algorithms and user interfaces; it's also about the strategic partnerships and regulatory challenges that will shape how we find information in the digital age.
