Apple’s announcement yesterday to add AI-driven search features to its Safari browser stunned the tech world Wednesday, erasing about $150 billion of Alphabet-parent Google market value overnight.
iPhone maker is “actively looking at” replacing Safari, Apple executive Eddy Cue testified in an antitrust case against Google’s search monopoly. Google shares fell 7.3% on the news, which underscored investors’ concerns about the tech giant’s future revenue streams.
Cue delivered another troubling revelation for Google: searches on Safari fell for the first time last month as users increasingly turn to AI alternatives. This change indicates that a revolutionary transformation may be taking place in the search business, imperiling Google’s business model.
Google’s Safari Search Deal Under Threat
Google has been paying Apple approximately $20 billion every year for years to be the default search engine on Safari browsers. The deal has been highly profitable for both firms, with estimates suggesting that about 36% of Google’s search ad revenue comes from Safari.
“The loss of exclusivity at Apple should have very severe consequences for Google even if there are no further measures,” said D.A. Davidson analyst Gil Luria. “Many advertisers have all of their search advertising with Google because it is practically a monopoly with almost 90% share. If there were other viable alternatives for search, many advertisers could move much of their ad budgets away from Google.”
This potential shift comes at a particularly vulnerable time for Google, which faces two major antitrust lawsuits from the U.S. Justice Department. One proposed remedy involves banning Google from paying companies to be the default search engine, which would further erode its market position.
Apple isn’t stopping with just internal AI search development. Cue also mentioned that the company plans to add external AI search providers, including OpenAI and Perplexity AI, as future search options for Safari users.
“This also shows how far generative search sites, such as ChatGPT and Perplexity have come,” noted Yory Wurmser, principal analyst for advertising, media & technology at eMarketer. The growth of these platforms has been impressive, with ChatGPT reporting over 1 billion weekly web searches for its search feature and more than 400 million weekly active users as of February.
Google vs. Apple: The AI Search Showdown
Google, however, isn’t standing still. After initially being criticized for falling behind in the AI race following ChatGPT’s 2022 launch, the company has invested heavily in AI development. Earlier this year, Google introduced an “AI mode” on its search page and expanded its AI Overviews feature to users in over 100 countries.
The company also appears to be pursuing a new partnership with Apple. CEO Sundar Pichai testified last month that Google hopes to reach an agreement by mid-year to include its Gemini AI technology on new iPhones.
In response to Apple’s announcement, Google emphasized that it continues to see growth in overall search queries, including “total queries coming from Apple’s devices and platforms.” The company stated that “People are seeing that Google Search is more useful for more of their queries , and they’re accessing it for new things and in new ways,” citing voice and visual search features as contributors to search volume growth.
Despite Google’s reassurances, Apple’s potential entry into AI search is the greatest threat so far to Google’s search supremacy. With billions of ad dollars on the line and a range of AI players gaining traction, the search landscape appears ready for its most dramatic transformation in decades.
For consumers, this competition will probably mean greater innovation and choice in how we get information online. For Google, it means a fight to maintain the search supremacy that has defined the company for over two decades.
