Apple has revealed, during the antitrust trial against Google, that it is studying integrating search engines based on artificial intelligence directly into Safari, which has caused a drop of more than 7% in Alphabet’s share price after EddyCue’s testimony.
This movement questions the agreement of approximately 20,000 million dollars per year that guarantees Google to be the default search engine on Apple devices
It also reflects growing user preference for conversational AI responses like ChatGPT or Perplexity, forcing Google and other competitors to accelerate their own AI initiatives in search
Statements in the antitrust trial
During the US Department of Justice’s antitrust trial against Alphabet, EddyCue, Apple’s senior vice president of services, testified that searches in Safari experienced a drop in April 2025, the first in more than two decades, attributed to the rise of AI tools that offer immediate and contextual responses.
In his speech, Cue explained that, while the agreement with Google remains the default option for financial reasons, Apple is “actively exploring” alternatives such as Perplexity, OpenAI and Anthropic to integrate into Safari
Importance of Safari as a gateway
Safari is the default browser on all Apple devices, making any changes to its search engine a critical factor for the global online search market.
Approximately a third of Google’s search traffic comes from iPhone users, and the deal with Apple, valued at around $20 billion annually, has been key to maintaining Google’s dominance in this segment
Market reaction: Fall in Alphabet’s share price
Following Cue’s statements on May 7, 2025, Alphabet shares fell between 7% and 7.5% on the same trading day, reflecting investor fears that the diversification of search options in Safari will reduce the traffic Google receives from devices Apple
There are also concerns about advertising revenue. Google generates more than half of its revenue through search advertising, with $237.86 billion reported in 2023.
An eventual decrease in traffic from Safari could significantly erode this revenue, as users would opt for AI interfaces that condense information into conversational responses, without the need to click multiple links
Challenges for Google’s business model
Vulnerability of the agreement with Apple
The agreement with Apple has for years been the main source of iPhone users who use Google as a search engine. If Apple decides to offer multiple search engines, the value of that pact could be renegotiated or even extinguished, directly impacting Alphabet’s financial results
Rise of AI-powered search
Tools like ChatGPT, with more than 3.8 billion monthly visits, and Perplexity, known for its source-citation responses, are gaining ground as alternatives to traditional searches.
These platforms employ advanced language models (e.g., GPT-4) to provide contextual summaries and enable conversational interactions, meeting the demand of users seeking fast, personalized information
The reaction of Google and other actors
Google Initiatives: AI Overviews and AIMode
To counter this threat, Google has deployed “AI Overviews”, sections generated by AI that appear at the top of search results and that already reach some 1.5 billion monthly users in more than 140 countries.
In addition, in March 2025 it presented “AI Mode”, an experimental mode for Google One AI Premium subscribers that replaces links traditional summaries and allows you to ask follow-up questions.
Google plans to monetize these summaries with ads, although third-party publishers fear a drop in traffic to their websites.
Competition from Microsoft and startups
Microsoft has integrated ChatGPT into Bing, offering up-to-date, conversational responses.
For their part, startups like DeepSeek and Anthropic are developing AI search engines with multimodal capabilities and advanced reasoning, expanding the competitive ecosystem outside of established giants
Transformation of the search market
The natural language processing (NLP) market is expanding and is projected to be worth tens of billions of dollars in the coming years, with applications in healthcare, finance and education.
The growing preference for AI interfaces and the ability to integrate conversational systems into browsers suggest that the dynamics of online search will change irreversibly
Role of antitrust regulation
The DOJ trial not only examines the financial relationship between Apple and Google, but could impose remedies that force Google to share data or even divest in certain areas.
However, EddyCue warned that technological innovation, rather than legal intervention, is usually the driving force behind market changes.
An existential threat to Google
Apple’s announcement to incorporate AI searches in Safari has shaken both the market and Google’s business model. The first-ever drop in search usage in Safari and the abrupt drop in Alphabet’s stock reflect the magnitude of the threat posed by conversational AI alternatives.
Google, aware of the challenge, has rolled out features like AI Overviews and AIMode, and other companies are following suit, accelerating a transformation that couldcompletely redefine the way users search and consume information online.
In this new scenario, the ability to innovate and adapt quickly will be key to maintaining or retaining the dominant position in the search market.
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