New York: Apple’s move to incorporate AI-powered search options into its Safari browser marks a significant challenge to Google’s longstanding dominance in the online search market, especially given Google’s heavy reliance on traffic from iPhone users for its lucrative advertising business.
The announcement sparked immediate repercussions in financial markets, sending shares of Google-parent Alphabet down 7.3%—a decline that erased approximately $150 billion from its market capitalization.
According to a source familiar with the matter, as reported by the international news agency Reuters, Apple is “actively looking at” revamping its Safari browser to include AI-enhanced search functionalities. The information came to light during Apple executive Eddy Cue’s testimony at a high-profile antitrust trial examining Google’s monopoly in the search sector. The source noted that Cue revealed a decline in Safari searches for the first time last month, attributing the shift to users increasingly turning toward AI-driven tools. Apple’s own shares closed 1.1% lower on the day.
Google responded by asserting that it continues to see growth in search query volumes, including from Apple devices. “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,” the company wrote in a blog post. Google pointed to voice and visual search as key drivers of overall growth, though it remains unclear whether the metrics cited by Cue and Google are based on identical parameters.
Nevertheless, Cue’s testimony underscores an emerging trend that could dramatically reshape the search landscape. Google’s core business—dominated by its search engine—has long been a prime channel for advertisers and is now under increasing scrutiny from U.S. regulators, who have launched two major antitrust lawsuits against the tech giant.
A critical pillar of Google’s dominance has been its status as the default search engine on Safari, a privilege for which it pays Apple an estimated $20 billion annually. This payment accounts for roughly 36% of Google’s search advertising revenue generated through Safari, analysts say.
Among the remedies proposed by the U.S. Justice Department is a ban on such payments, a move that could dismantle a key component of Google’s market stronghold. “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.”
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Despite the mounting pressure, Google is not without options. Initially dismissed as lagging in the AI race after ChatGPT’s explosive debut in late 2022, Google has since ramped up its AI initiatives, backed by substantial resources and extensive user data. The tech giant launched an “AI mode” on its search interface earlier this year in a bid to retain users tempted by competing AI models.
It also rolled out its AI Overviews—automated summaries presented above traditional search results—to more than 100 countries, and began monetizing the feature with advertisements to bolster search ad revenues.
Google CEO Sundar Pichai recently testified that the company is aiming to integrate its Gemini AI system into Apple’s ecosystem by mid-year through a new partnership.
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Meanwhile, Apple is widening its ecosystem to include AI search alternatives. Cue disclosed that Apple plans to introduce search providers such as OpenAI and Perplexity AI as options within Safari, as reported by Bloomberg.
“(Apple’s plan) also shows how far generative search sites, such as ChatGPT and Perplexity have come,” noted Yory Wurmser, principal analyst at eMarketer. Wurmser added that Google’s willingness to pay tens of billions to retain default status highlights just how vital these agreements are for its business model.
For context, ChatGPT in April reported over 1 billion weekly search queries through its platform, supported by a staggering 400 million weekly active users as of February.
