Google's stock took a significant hit on May 7, 2025, dropping 7.26% after comments from Apple’s Eddy Cue raised concerns about the future of search engines. Cue, Apple’s Senior Vice President of Services, testified in an ongoing antitrust case against Google, stating that searches conducted through Apple's Safari browser had decreased for the first time in over two decades. He suggested that AI-driven platforms like Perplexity, OpenAI, and Anthropic could become viable alternatives to traditional search tools.
In his testimony, Cue acknowledged Google’s current dominance in the search engine market but emphasized the potential threat posed by the rise of AI technologies. His remarks sparked a sell-off in Google’s stock, wiping out approximately $155 billion from Alphabet Inc. Class A's market value. This dramatic decline prompted analysts to weigh in on the situation.
Analysts from Jefferies, led by Brent Thill, characterized the stock price drop as an overreaction, labeling it a "buying opportunity." They argued that Google’s advancements in AI and its extensive search ecosystem were being overlooked. Jefferies pointed out that Google has rapidly adopted AI Overviews, which now attract over 1.5 billion monthly users, and that its revenue generation remains comparable to traditional search methods.
Despite concerns raised by Cue, Jefferies analysts highlighted that Google’s core search business remains robust, with a 10% year-over-year increase in first-quarter revenue. This growth contrasts with the single-digit growth experienced in 2023, indicating a rebound in performance. Furthermore, Google continues to dominate the search engine market, holding approximately 90% of the global market share, including 94% on mobile devices and 79% on desktops, according to StatCounter data from May 2025.
Google's app usage on iOS has also risen by 15% compared to the previous year, demonstrating that users are increasingly turning to Google directly for searches. This trend raises questions about Cue's assertion that Safari users are moving away from Google.
Moreover, Jefferies pointed out that Safari represents only a fraction of the browser market, with Chrome commanding a 66% share compared to Safari's 17%. The analysts believe that Google’s significant financial contributions to Apple to maintain its status as the default search engine in Safari might influence Apple’s portrayal of Google in the ongoing antitrust case.
In response to Cue's testimony, Google issued a statement through its blog, The Keyword, asserting that overall search volumes on its platform have increased, contradicting Cue’s claims. The company emphasized that while Safari's search counts may be decreasing, searches conducted on Apple devices using Google have risen.
Cue's comments also hinted at Apple's potential shift towards integrating AI search capabilities into Safari. Reports suggest that Apple has already begun discussions with Perplexity to incorporate its services into the browser. This move could further challenge Google's search engine dominance and reflect a broader trend in the industry toward AI-driven search solutions.
As the antitrust case unfolds, the implications for both companies remain significant. Google’s substantial digital advertising revenue far exceeds that of Apple, making it a critical area of competition. However, concerns about AI Overviews potentially displacing traditional search methods could pose risks to Google’s revenue streams, particularly if users begin to favor AI tools over conventional searches.
In light of these developments, analysts are advising Google to enhance its AI user experience to compete more effectively with Apple's initiatives. The pressure is on for Google to not only maintain its market share but also to innovate in the rapidly evolving landscape of search technology.
As the dust settles from Cue’s statements and the stock market reaction, the future of search engines hangs in the balance. With AI technologies on the rise and traditional search methods facing scrutiny, both Google and Apple must navigate this shifting terrain carefully.
In conclusion, while Google faces challenges from emerging AI competitors, its established position in the search market and ongoing innovations in AI could help it retain its lead. The coming months will be crucial as both tech giants adapt to a landscape increasingly influenced by artificial intelligence and changing user preferences.