Shares of Alphabet Inc., Google’s parent company, saw a drop of over 7% on Wednesday, as a senior executive from Apple hinted that the tech giant was exploring alternatives to Google as the default search engine for Safari.
Eddie Cue, Apple’s Senior Vice President of Services, testified that the company is “actively considering” AI-driven search engines to potentially replace Google on iPhones and other devices as part of an antitrust lawsuit filed by the Department of Justice against Google.
Alphabet’s shares recently plummeted by about 9%, settling at around $149.95.
According to reports, Cue, who works closely with CEO Tim Cook, mentioned that Apple has observed a decline in search activities among Safari users.
He expressed anticipation that AI-driven platforms like ChatGPT and others could eventually overshadow traditional search engines like Google.
Apple intends to incorporate these new tools into Safari’s search options, although Cue noted these wouldn’t be set as default features immediately as there’s room for improvement.
He acknowledged that discussions had taken place regarding various AI solutions.
“Before the advent of AI, I didn’t view any alternatives seriously,” he admitted.
However, he believes the current landscape is shifting, with emerging players approaching the search challenge from innovative angles.
Apple is looking to integrate ChatGPT into Siri and anticipates introducing Google’s Gemini, an AI search tool, later this year.
During this evaluation, Cue mentioned considering several other AI models, including those from Humanity, Perplexity, Deepseek, and Elon Musk’s Grok.
He underlined that collaborating with OpenAI does not restrict Apple from exploring opportunities with other providers.
Cue noted that before selecting ChatGPT for iOS 18, Apple had reviewed multiple options, including Google.
He referred to this process as a “bake-off,” sharing that Google submitted a proposal which included disagreements regarding their partnership with OpenAI.
He added that the rapid evolution of technology could render even today’s most pivotal devices obsolete.
“The iPhone a decade from now may seem far-fetched,” he remarked.
“True competition emerges from technological shifts, and AI represents such a change, offering new opportunities for various players.”
Cue also mentioned that for AI platforms to stay competitive, they would need to significantly enhance their search capabilities.
Despite Google having paid Apple $20 billion to maintain default search engine status for Safari on its devices in 2022, there’s skepticism about the sustainability of this relationship.
Cue is optimistic that the advantages of AI-driven tools could attract users, even if advancements take time.
With sufficient financial backing and major players in the game, he stated, the question isn’t if this shift will happen, but rather how it will unfold.
Alphabet’s stock decline on Wednesday negatively impacted the broader market, while Apple’s shares dipped by 2.5% following Cue’s testimony.
The S&P 500, which had shown gains earlier in the day, briefly turned negative.
In the context of the DOJ’s antitrust suit against Google, it was revealed that Google’s substantial payment to Apple to maintain its search engine’s prominence on various platforms has garnered attention.
The DOJ asserts that such agreements stifle competition, making it difficult for rival search engines to gain traction and visibility.
This post is open for comments from Alphabet.
