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Apple Eyes Move to AI Search, Threatening Google Dominance
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2:42Now PlayingApple Inc. is “actively looking at” revamping the Safari web browser on its devices to focus on AI-powered search engines, a seismic shift for the industry hastened by the potential end of a longtime partnership with Google.
Eddy Cue, Apple’s senior vice president of services, made the disclosure Wednesday during his testimony in the US Justice Department’s lawsuit against Alphabet Inc. The heart of the dispute is the two companies’ estimated $20 billion-a-year deal that makes Google the default offering for queries in Apple’s browser. The case could force the tech giants to unwind the pact, upending how the iPhone and other devices have long operated.
Beyond that upheaval, AI is already making gains with consumers. Cue noted that searches on Safari dipped for the first time last month, which he attributed to people using AI. Cue said he believes that AI search providers, including OpenAI, Perplexity AI Inc. and Anthropic PBC, will eventually replace standard search engines like Alphabet’s Google. He said he believes Apple will bring those options to Safari in the future.
MoffettNathanson co-founder Michael Nathanson explains how this change could signal the beginning of the end for the dominance of Google's search engine, which has long been the industry standard for Internet-based queries. Michael speaks with Tom Keene and Paul Sweeney on Bloomberg Radio.
“We will add them to the list — they probably won’t be the default,” he said, indicating that they still need to improve. Cue specifically said the company has had some discussions with Perplexity.
“Prior to AI, my feeling around this was, none of the others were valid choices,” Cue said. “I think today there is much greater potential because there are new entrants attacking the problem in a different way.”
The looming shift is a giant one for the iconic iPhone and a company with more than 2 billion active devices. Since Apple’s original smartphone launched in 2007, users have navigated the web by making searches through Google. Now, consumers will enter a universe dominated by AI from multiple companies.
Investors saw the testimony as a bad omen for both Alphabet and Apple, which may have to abandon a lucrative arrangement.
Alphabet shares tumbled 7.3% on Wednesday, their biggest decline since February. Apple shares also slumped on Cue’s comments, and were down 1.1% at market close. Google responded by saying in a blogpost it’s seen an increase in search queries from Apple devices.
Apple currently offers OpenAI’s ChatGPT as an option in the Siri digital assistant and is expected to add Gemini, Google’s AI search product, later this year. Cue said Apple also looked at Anthropic, Perplexity, China-based DeepSeek and Grok from Elon Musk’s xAI for this purpose. He said the agreement with OpenAI allows it to add other AI providers to the company’s operating system, including Apple’s own.
Before ChatGPT was chosen last year as part of Apple Intelligence in iOS 18, there was a “bake-off” with Google, Cue said. He said Google had provided a term sheet that “had a lot of things Apple wouldn’t agree to and didn’t agree to with OpenAI.”
Technology is changing fast enough that people may not even use the same devices in a few years, Cue said. “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.”
Cue said that, in order to improve, the AI players would need to enhance their search indexes. But, even if that doesn’t happen quickly, they have other features that are “so much better that people will switch.”
“There’s enough money now, enough large players, that I don’t see how it doesn’t happen,” he said, referring to a switch from standard search to AI.
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