Google's stock took a significant hit on Wednesday, May 7, 2025, after comments made by Eddy Cue, Apple's Senior Vice President of Services, during an ongoing antitrust trial against Alphabet Inc., Google's parent company. Cue revealed that search operations on Google via Apple's Safari browser decreased for the first time in April 2025, attributing this decline to users increasingly opting for AI-powered tools instead of traditional search engines. This revelation sent shockwaves through the market, resulting in a drop of over 7% in Google's stock prices, which wiped out approximately $155 billion from Alphabet's market value.
During his testimony, Cue indicated that the decrease in search activity on Safari was unprecedented, marking a significant shift in how users engage with search technology. He cited AI platforms like OpenAI, Perplexity, and Anthropic as alternatives that are becoming more appealing to consumers. "Apple is likely to integrate AI search capabilities more directly into its devices over time," Cue stated, hinting at a future where AI could play a central role in search functionalities on Apple devices.
The implications of Cue's testimony are profound, especially considering that Apple reportedly receives over $20 billion annually from Google to maintain its status as the default search engine on iPhones and iPads. This lucrative arrangement lies at the heart of the antitrust case brought by the U.S. Department of Justice against Google, raising questions about the competitive landscape of the search engine market.
In response to Cue's claims, Google issued a statement asserting that it continues to experience overall growth in search queries, including an increase in inquiries from Apple devices. Google emphasized its commitment to providing concise, AI-generated answers rather than presenting exhaustive lists of search results. This strategy is part of Google's broader effort to adapt to the changing dynamics of user behavior as AI technologies gain traction.
Sundar Pichai, Google's CEO, has been optimistic about the company's AI initiatives, believing they will enhance user engagement. Pichai remarked, "After nearly a year since we launched AI Overviews in the U.S., we are still seeing usage growth as people learn that search is more beneficial for their inquiries." However, Cue's testimony challenges this narrative, suggesting that Google's efforts have not entirely insulated its core market from the rising influence of AI.
The market reacted swiftly to Cue's statements, with analysts expressing concern over the potential for AI to disrupt Google's dominance in search. The decline in stock prices reflects investor anxiety about whether AI could significantly erode Google's market share, which currently stands at approximately 90% of the global search engine market, including a commanding 94% on mobile devices and 79% on desktops.
Despite the turmoil, some analysts believe the market reaction was exaggerated. Analysts from Jefferies labeled the drop in Google's stock as an "overreaction," arguing that the company's advancements in AI and its extensive search systems have been overlooked. They pointed out that the AI Overviews feature, which boasts over 1.5 billion active monthly users, has been successfully shifting user behavior without posing a direct threat to traditional search.
Moreover, analysts noted that Safari represents only a fraction of the overall search market, with Chrome dominating at 66% of global traffic compared to Safari's 17%. Additionally, data shows that daily users of the Google app on iOS increased by 15% year-over-year in April 2025, indicating that users are still actively engaging with Google, even amidst the competitive pressures from AI.
As the landscape of search technology evolves, the competition between traditional search engines like Google and emerging AI platforms will likely intensify. Cue's comments have reignited discussions about the future of search and the potential for AI to reshape user interactions with information online.
In the wake of these developments, the tech industry will closely monitor how Google adapts to these challenges. The company's ability to integrate AI effectively into its search offerings while maintaining user trust and satisfaction will be crucial in determining its long-term viability in a rapidly changing market.
As the antitrust case against Google unfolds, the stakes are high not only for the company but also for the broader tech ecosystem. The outcome could have lasting implications for how search engines operate and how consumers access information in the digital age.
The ongoing dialogue surrounding AI's impact on search technology highlights the need for continued innovation and adaptation within the industry. As users increasingly turn to AI for their information needs, companies like Google must navigate the delicate balance between maintaining their market share and embracing the transformative potential of AI.
In conclusion, the intersection of AI and traditional search is no longer a distant possibility but a present reality that companies must reckon with. The future of search will undoubtedly be shaped by these developments, as both users and technology continue to evolve.
