On Wednesday, May 7, 2025, Google stock (GOOG) tumbled over 6% after a surprising development involving Apple raised fresh concerns about the future of Google’s core search business. During a testimony in Alphabet’s ongoing antitrust trial, Apple’s services chief Eddy Cue revealed that the company is seriously considering AI-powered search engines — including Perplexity — for future versions of Safari, Apple’s built-in browser. The move, if it happens, could mark a significant shift in how millions of people search the web and possibly eat into Google’s dominance.
According to Cue, Apple has noticed a decrease in the number of searches conducted by Safari users, a trend he attributes to the rising use of AI-powered tools. He confirmed that Apple is in talks with Perplexity AI, OpenAI, and Anthropic, exploring potential partnerships that could eventually replace traditional search engines like Google in Safari. "Last month marked the first-ever dip in Safari search volume," Cue stated, highlighting a noteworthy shift in user behavior.
Google pays Apple around $20 billion annually to remain the default search engine on Safari. This massive deal benefits both sides: Apple earns a steady stream of revenue, while Google maintains visibility among iPhone and Mac users. However, if Apple shifts to AI-driven search, it could severely impact Google’s ad revenue pipeline. Investors are reacting to the long-term risk that AI competition poses to Google’s dominance in search and its lucrative deals with partners like Apple.
For Google, this isn’t just about one deal; it’s about the bigger picture — the future of search itself. AI-powered tools are rapidly changing how people look for information, and Google has been racing to keep up with newer players like OpenAI and Perplexity. The company has rolled out AI Overviews — smart answers generated by AI that show up in regular search — and is testing a more conversational “AI Mode.” It also offers Gemini, its standalone AI chatbot, but it hasn’t yet unified these into a single seamless experience like some of its rivals.
The reaction from Wall Street was swift. Google’s parent company, Alphabet, saw its stock fall sharply, closing at $165.20 on Tuesday, May 6, 2025. While the company remains a giant with a market cap just shy of $2 trillion, the growing uncertainty about its search future is clearly weighing on investor confidence. Investment firm Mairs & Power flagged Alphabet’s underperformance in its recent quarterly report, noting that Google’s share price dragged down its portfolio, driven by concerns over how quickly and effectively Google can adapt to the fast-changing AI landscape.
Despite these challenges, Google’s fundamentals remain solid. The company pulled in $90.2 billion in revenue last quarter, growing 12% year-over-year. Hedge fund interest also remains strong, with 174 major funds holding Alphabet stock at the end of Q1, up from 160 in the previous quarter. But the message is clear: investors want to see how Google will evolve. With Apple eyeing AI search and users growing more comfortable with chat-based tools, Google’s next moves could define its place in the next era of the internet.
During the antitrust trial, Eddy Cue stated that Apple is “actively looking at” AI-powered search engines that could replace Google as the default option on the iPhone and other devices. Cue testified that Apple has noticed a decrease in searches conducted by Safari users, with an increasing number migrating to AI, according to Bloomberg. He expects AI-driven search platforms — such as OpenAI’s ChatGPT, Perplexity AI, and Anthropic — to eventually supplant traditional search engines like Google. Cue added that Apple plans to integrate these emerging tools as search options within Safari down the line, although he noted that replacing Google outright isn’t currently on the table.
He emphasized that the rapid pace of innovation in technology could eventually render even today’s most essential devices obsolete. “You may not need an iPhone 10 years from now as crazy as it sounds,” he said. “The only way you truly have true competition is when you have technology shifts. Technology shifts create these opportunities. AI is a new technology shift, and it’s creating new opportunities for new entrants.” Cue also indicated that for AI platforms to remain competitive, they’ll need to significantly enhance their search indexes.
In 2022, Google paid Apple $20 billion to remain the default search engine on Safari across iPhones, iPads, and Macs. This figure was disclosed in court documents during the Justice Department’s antitrust lawsuit against Google, marking the first public confirmation of the payment amount. The DOJ contends that such arrangements hinder competition by making it challenging for rival search engines to gain visibility and market share.
Despite the pressure, Google has been making strides to enhance its AI capabilities. The company introduced AI Overviews in Google Search and is testing a new AI Mode that works more like apps such as ChatGPT. Other companies, like Microsoft, are also competing with AI options like Copilot Search. Nevertheless, Google’s deals with Apple and others like Samsung help keep its search engine widely used.
On the stock market, Google shares fell more than 9% in afternoon trade on Wednesday, May 7, 2025, as investors reacted to the news. Apple’s stock also took a hit, falling up to 2.5% following Cue’s testimony. The S&P 500 Index, which had been up more than 0.5% earlier in the day, briefly turned negative. As the antitrust case continues, the future of Google’s search business remains uncertain, with many watching closely to see how the situation unfolds.
Despite these challenges, analysts maintain a positive outlook on Google’s stock. A consensus rating of Strong Buy has emerged, based on 28 Buys and eight Holds assigned in the past three months. The average price target of $198.79 per share implies a potential upside of 31.3% from current levels. As the landscape evolves, the question remains: can Google adapt quickly enough to stay ahead in the AI-driven search race?
