Google Parent Dives Over 7% as Apple Admits Search Fading and Seeks AI Searc...

TMTPOST -- Alphabet Inc. shares sank as much as 9.5% and settled 7.5% lower on Wednesday, leading to a loss of $211 billion in market value. Google parent suffered its worst day since October 2023 and the third largest daily percentage price drop since it went public in 2004, after its key partner Apple Inc. suggested a pivot that threatens Google’s dominance on search.

Credit：Google

Apple is "actively looking at" integrating an AI-powered search engine into its web browser Safari, said Eddy Cue, the senior vice president of Apple’s services unit overseeing the App Store and Apple devices’ default Safari browser, in a testimony in the U.S. federal government’s antitrust case against Google, Bloomberg reported on Wednesday.

Cue said he believes Google should remain the default search option on Safari but he acknowledged AI is a transformative wave that could open doors for new players. He said April was the first month search activity on Safari slipped.

Cue indicated Apple is considering alternatives such as OpenAI, Anthropic and Perplexity AI, the companies behind popular AI tools like ChatGPT, Claude and Perplexity Assistant. He said Apple has already begun talks with Perplexity. He expected AI search engines will eventually replace standard search engine like Google.

According to court documents filed in the U.S. Department of Justice’s lawsuit against Alphabet last year, Goolge parent company paid $20 billion to Apple in 2022 to be the default search engine on Safari. That marks an increase from the $18 billion reported paid in 2021. Analysts estimated Google’s annual payment of around $20 billion accounted for roughly 36% of of its search advertising revenue generated through Safari. The filling revealed in May 2024 showed Google’s 2020 payments accounted for 17.5% of the Apple’s operating income.

Google was sued by the Justice Department in 2020 over its control of about 90% of the online search market, and a U.S. District Court judge ruled in last August the tech giant accted illegally to maintain a monopoly on search and related advertising. The judge now is determining what penalties Google and Alphabet will face as a result of the decision. Cue was reported on Wednesday to testify that he has lost sleep over the possibility of losing the revenue share from the two companies’ agreement.