Shares of Alphabet and Apple dropped on Wednesday after Apple’s services chief, Eddy Cue, expressed concerns that AI-driven search engines could eventually replace traditional search engines like Google. During a federal court testimony in Washington, Cue revealed that Apple plans to integrate artificial intelligence services from companies like OpenAI, Perplexity, and Anthropic as potential search options in Apple’s Safari browser. This shift signals a significant move away from reliance on Google for search services.
Cue’s remarks come amid the ongoing Justice Department lawsuit against Alphabet, which claims that Google holds an illegal monopoly over the online search market. A U.S. District Court judge had previously ruled that Google’s dominance in the search engine industry violates antitrust laws, and the current trial is focused on determining penalties or corrective actions. A central issue in the case is Google’s practice of paying platform providers, including Apple, to make Google the default search engine on their devices, a deal worth billions of dollars each year. In 2022, Google reportedly paid Apple as much as $20 billion to remain the default search engine on iPhones.
The potential consequences of the lawsuit are significant, as Google’s lucrative advertising model could face major disruptions if the court orders changes to its practices. Alphabet’s stock saw a sharp decline of more than 7% on Wednesday in response to these developments. Apple’s shares also took a hit, falling 2%, as the lawsuit threatens not only Google but also the iPhone maker, which benefits greatly from its financial arrangement with Google.
Cue’s comments further raised concerns about the future of this partnership. While he acknowledged that Google should continue to be the default search engine on Safari, he expressed unease about losing the substantial revenue Apple receives from the arrangement. In the testimony, Cue noted that searches on Safari had decreased for the first time in April, attributing the decline to the growing popularity of AI-based search tools.
This evolving situation places both Alphabet and Apple at the center of a rapidly changing search engine landscape, where AI-driven technologies could reshape the competitive dynamics in the industry.
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