How Apple's AI-powered Safari threatens Google's search dominance
What's the story
Apple is said to be considering the addition of artificial intelligence (AI) to its Safari browser.
The move could prove to be a major threat to Google's supremacy in the online search space, especially among iPhone users.
Eddy Cue, Apple's services chief, revealed the development during an antitrust case against Google on Wednesday.
He also noted that Safari's search volume fell last month as users turned to AI.
Scenario
Google's exclusive deal with Apple under threat
Google pays Apple an estimated $20 billion annually to remain the default search engine on Safari, accounting for about 36% of its Safari-based ad revenue.
The US Justice Department has proposed banning such deals to curb Google's dominance in online search.
Analysts warn that losing exclusivity on Apple devices alone could significantly hurt Google, as many advertisers currently rely solely on its platform due to its near 90% market share.
Viable alternatives could prompt a major shift in ad spending.
Market impact
Alphabet's market value takes a hit
The news of Apple's potential AI integration into Safari had an immediate impact on the market.
Shares of Google's parent company, Alphabet, fell 7%, wiping out as much as $150 billion from its market value.
Google, however, said it continues to see growth in overall search queries, including those from Apple's devices and platforms.
Counter moves
Google's response to Apple's AI integration
Google acknowledged AI's contribution to search volume growth, mentioning voice and visual search features. But it's unclear if Cue used similar criteria in his testimony.
Although perceived as an underdog in the AI race after ChatGPT's debut in late 2022, Google has been investing heavily in its own AI initiatives.
Earlier this year, it added an "AI mode" on its search page and expanded AI Overviews for users across over 100 countries.
Future plans
Will Apple use Gemini AI too?
Google CEO Sundar Pichai, during an antitrust trial last month, hoped to strike a deal with Apple by the middle of this year to integrate its Gemini AI technology into new phones.
Meanwhile, Cue announced that the company intends to add AI search providers such as OpenAI and Perplexity as future search options.
The move underscores the increasing dominance of generative search sites like ChatGPT and Perplexity in defining the future of online searches.