Alphabet Inc., the parent company of Google, saw its shares fall by more than 6% on May 7, following surprising testimony from Apple executive Eddy Cue during the U.S. government’s ongoing antitrust case against Google. Cue revealed that Apple is exploring the use of AI-powered search engines like Perplexity AI in its Safari browser a potential move that could drastically disrupt Google’s dominance in the search engine market.
Speaking under oath, Cue said Apple has observed a decline in Safari’s search traffic for the first time, attributing the drop to users experimenting with AI-driven search alternatives. Although he assured the court that Apple has no immediate plans to drop Google as Safari’s default search engine, he suggested that a long-term shift toward AI tools is on the horizon.
Eddy Cue, Senior Vice President of Services, Apple, said.“We’re evaluating AI search engines such as Perplexity for integration into Safari.” He added, “There was a decline in search activity in Safari last month, which we’ve never seen before.”
The disclosure sent shockwaves through the market and raised alarm bells at Alphabet, which has relied heavily on its lucrative deal with Apple estimated to be worth $20 billion annually to retain Google as the default search engine on Apple devices. Losing that deal, or even seeing reduced reliance, could significantly impact Google’s market share and advertising revenue.
The mention of Perplexity AI, a rising player in the AI search space, signals a broader shift toward more intelligent, context-aware search experiences. Users are increasingly turning to generative AI tools that can provide concise answers rather than traditional lists of links. Apple has already begun exploring these trends through its Apple Intelligence platform, which offers integrations with tools like ChatGPT.
While Apple’s partnership with Google remains intact for now, Cue’s comments add to growing concerns about the future of traditional search engines. His testimony aligns with the broader narrative of evolving consumer behavior and technological change factors that could upend long-standing industry dynamics.
Eddy Cue, Senior Vice President of Services, Apple, said, “AI search apps will eventually replace traditional search engines.”
Google isn’t sitting still. In response to AI competition, the company has introduced AI Overviews in Search and is experimenting with a ChatGPT-style AI Mode within the platform. It also continues to develop Gemini, a standalone AI search product. However, Gemini has not yet replaced the standard Google Search experience, which remains the primary tool for most users.
Despite these innovations, Google faces intensifying pressure from competitors like Microsoft’s Copilot and OpenAI’s Perplexity AI, both of which are quickly gaining traction. Microsoft, in particular, has taken an aggressive stance in integrating AI search into its ecosystem, adding Copilot across Windows, Bing, and Office tools.
Google’s reliance on search partnerships extends beyond Apple. The tech giant has similar deals with other device manufacturers like Samsung, ensuring that Google remains the default search option on millions of smartphones and tablets. However, if Apple the most influential mobile hardware provider shifts its strategy, it could trigger a domino effect throughout the industry.
The antitrust case itself adds further uncertainty. The U.S. Department of Justice alleges that Google has used its market power and deep pockets to stifle competition and maintain an illegal monopoly in online search. Apple’s revelations may play a key role in shaping the court’s decision.