Alphabet shares sink on report Apple may add AI search to its browser

Key Developments

Apple's services chief, Eddy Cue, testified in a federal court case against Google, stating his belief that AI search engines will eventually replace traditional ones like Google Search. He also revealed Apple's intention to integrate AI search options from companies such as OpenAI, Perplexity, and Anthropic into its Safari browser.

Impact on Alphabet and Apple

This news caused Alphabet's shares to plummet over 8%, and Apple's shares fell 2%. The potential shift away from Google as the default search engine on iPhones significantly threatens Google's substantial annual revenue from Apple (reportedly up to $20 billion in 2022).

Legal Context

Cue's testimony occurred within the Justice Department's antitrust lawsuit against Alphabet, focusing on Google's dominance in advertising technology and its payments to companies like Apple for default search engine status. The lawsuit's potential outcome poses a major risk to Google's advertising business.

Market Implications

Cue's statement about a decline in Safari searches in April, attributed to the rise of AI, further underscores the potential disruption to the established search engine market. This shift highlights the growing influence of AI on user behavior and its implications for technology giants.

• Apple plans to integrate AI search into Safari.
• Alphabet (Google) faces a major threat to its revenue.
• The Justice Department's lawsuit adds another layer of complexity.
• The market is reacting negatively to the potential loss of revenue for both companies.
• AI is reshaping the online search landscape.