May 7, 2025 – 10:06 PM PDT
(Reuters) – Apple’s intention to introduce AI-driven search capabilities in its Safari browser poses a significant challenge for Google, whose advertising revenue heavily depends on iPhone users utilizing its search engine.
This development negatively impacted shares of Google-parent Alphabet, which dropped 7.3%, equating to a loss of around $150 billion in market value.
A source acquainted with the situation revealed to Reuters that Apple is “actively looking at” revamping Safari. This came from comments made by Apple executive Eddy Cue during an antitrust case centering on Google’s dominance in online search.
According to the source, Cue noted a decline in searches on Safari for the first time last month, attributing this shift to users increasingly opting for AI alternatives. Meanwhile, Apple’s stock fell by 1.1%.
In response, Google stated that it continues to experience growth in overall search queries, including those originating from Apple’s devices and platforms, as mentioned in a blog post.
The company emphasized that users find Google Search to be more beneficial for a broader range of queries, utilizing it in innovative ways.
Google highlighted voice and visual search features as factors in the growth of search volume. It’s worth noting that it remains unclear if Cue used the same benchmarks when discussing search types during his testimony.
Nonetheless, Cue’s remarks indicate a potentially major transformation in the search landscape, posing a threat to Google’s prominent search business, which has become a focal point for U.S. antitrust regulators pursuing two significant lawsuits against the firm.
Google serves as the default search engine on Apple’s browser, a highly sought-after position for which it compensates Apple approximately $20 billion annually, or roughly 36% of its Safari-based search ad revenue, as estimated by analysts.
A proposal from the U.S. Justice Department suggests banning Google from making payments to companies for default search engine placements to curtail its online search dominance.
“The loss of exclusivity at Apple would have severe repercussions for Google, even without additional actions,” remarked D.A. Davidson analyst Gil Luria.
He noted that many advertisers currently allocate their entire search advertising budgets to Google due to its near-monopoly status, commanding almost 90% market share. If viable alternatives emerged, advertisers might divert substantial portions of their budgets away from Google.
However, Google is not without countermeasures.
After being perceived as lagging in the AI race following the widely publicized launch of ChatGPT in late 2022, Google has invested significantly in its AI initiatives and capitalized on its extensive data resources.
Earlier this year, the company introduced an “AI mode” on its search page to help retain users who might explore other AI options.
Additionally, Google expanded its AI Overviews—summarized content that appears above traditional hyperlinks resulting from search queries—across more than 100 countries, further enhancing search ad revenue.
CEO Sundar Pichai mentioned in testimony during an antitrust trial that Google aims to finalize an agreement with Apple by mid-year to incorporate its Gemini AI technology into new devices.
On Wednesday, Cue also indicated that Apple plans to integrate AI search providers, such as OpenAI and Perplexity AI, into its offerings in the future, according to a report from Bloomberg.
This shift underscores the significant advancements made by generative search platforms like ChatGPT and Perplexity, noted Yory Wurmser, principal analyst for advertising and media at eMarketer.
It’s evident that Google’s willingness to invest tens of billions to maintain its status as the default search engine speaks to the critical nature of these agreements. For reference, ChatGPT reported over 1 billion weekly web searches for its feature in April and boasted more than 400 million active users as of February.
