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Shares of Google parent Alphabet Inc. tanked more than 7% on Wednesday after a senior Apple executive signaled that the iPhone maker was looking at search engine alternatives for its Safari web browser.
Eddie Cue, Apple’s senior vice president of services, testified on Wednesday as part of the Justice Department’s antitrust lawsuit against Google that Apple was “actively looking at” AI-powered search engines which would replace Google as the default option on the iPhone and other devices.
Alphabet shares were recently off more than 9%, or $15.25, at $149.95.
Cue, who reports directly to CEO Tim Cook, testified in court on Wednesday that Apple has noticed a decrease in the number of searches that were conducted by Safari users — an increasing number of whom have migrated to AI, according to Bloomberg.
Cue said he expects artificial intelligence-driven search platforms — such as OpenAI’s ChatGPT, Perplexity AI and Anthropic — to eventually supplant traditional search engines like Google.
He added that Apple plans to integrate these emerging tools as search options within Safari down the line.
“We’ll include them in the lineup — though they likely won’t be set as the default,” he said, noting that the services still need refinement.
Cue confirmed that Apple has held preliminary talks with Perplexity.
“Before AI came into play, I didn’t see any of the alternatives as serious contenders,” he said.
“But I think the landscape is changing. There’s now real potential thanks to new players approaching the challenge with fresh perspectives.”
Apple currently integrates ChatGPT as a feature within Siri and is expected to introduce Google’s Gemini — its AI-powered search tool — sometime later this year.
According to Cue, Apple also evaluated AI offerings from Anthropic, Perplexity, DeepSeek and Elon Musk’s Grok during the process.
Cue emphasized that the deal with OpenAI does not limit Apple’s flexibility, saying it “allows [Apple] to add other AI providers into the company’s operating system, including its own.”
Cue revealed that before ChatGPT was selected to power Apple Intelligence in iOS 18, the company had evaluated multiple contenders — including Google.
He described the process as a “bake-off” and said Google submitted a term sheet that included “a lot of things Apple wouldn’t agree to and didn’t agree to with OpenAI.”
Cue emphasized that the rapid pace of innovation in technology could eventually render even today’s most essential devices obsolete.
“You may not need an iPhone 10 years from now as crazy as it sounds,” he said.
“The only way you truly have true competition is when you have technology shifts. Technology shifts create these opportunities. AI is a new technology shift, and it’s creating new opportunities for new entrants.”
He also noted that for AI platforms to remain competitive, they’ll need to significantly enhance their search indexes.
Still, even if that progress is slow, he believes the advantages of AI-driven tools may already be enough to entice users.
“There’s enough money now, enough large players, that I don’t see how it doesn’t happen,” Cue said, referring to a broader move away from traditional search engines toward AI alternatives.
Alphabet’s stock dropped by as much as 7% on Wednesday, helping to pull the broader market downward.
Apple also took a hit, falling up to 2.5% following Cue’s testimony.
The S&P 500 Index, which had been up more than 0.5% earlier in the day, briefly turned negative.
In 2022, Google paid Apple $20 billion to remain the default search engine on Safari across iPhones, iPads and Macs.
This figure was disclosed in court documents during the Justice Department’s antitrust lawsuit against Google, marking the first public confirmation of the payment amount.
The agreement between Google and Apple has been a focal point in the DOJ’s case, which alleges that Google’s substantial payments to secure default search engine status on various platforms have contributed to its dominance in the search market.
The DOJ contends that such arrangements hinder competition by making it challenging for rival search engines to gain visibility and market share.
The Post has sought comment from Alphabet.
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