Apple's plan to offer AI search options

8/5/2025 6:11

Apple's plans to add AI-powered search

options to its Safari browser are a big blow to Google, whose

lucrative advertising business relies significantly on iPhone

customers using its search engine.



The news slammed shares of Google-parent Alphabet,

which closed down 7.3%, wiping off roughly $150 billion from its

market value.



The iPhone maker was "actively looking at" reshaping Safari,

a source familiar with the matter told Reuters, citing Apple

executive Eddy Cue who was offering testimony at an

antitrust case on Wednesday over Google's dominance in online

search.



Cue said searches on Safari fell for the first time last

month due to users increasingly turning to AI, according to the

source. Apple stock closed down 1.1%.



The commentary suggests that a seismic shift in search is

likely underway, threatening Google's dominant search business -

a go-to advertising destination for marketers that has now

become a target for U.S. antitrust regulators, which filed two

major lawsuits against the company.



Google is the default search engine on Apple's browser, a

coveted position for which it pays the iPhone maker roughly $20

billion a year, or about 36% of its search advertising revenue

generated through the Safari browser, analysts have estimated.



Banning Google from paying companies to be the default

search engine is among the remedies that the U.S. Justice

Department has proposed to break up its dominance in online

search.



"The loss of exclusivity at Apple should have very severe

consequences for Google even if there are no further measures,"

D.A. Davidson analyst Gil Luria said.



"Many advertisers have all of their search advertising with

Google because it is practically a monopoly with almost 90%

share. If there were other viable alternatives for search, many

advertisers could move much of their ad budgets away from

Google," Luria said.



Google is not defenseless.



Written off as an also-ran in the AI race by critics after

ChatGPT's buzzy launch in late 2022, Google has reached into its

deep pockets to fund its AI efforts and leverage its vast data

trove.



The company introduced an "AI mode" on its search page

earlier this year, looking to retain its millions of users from

going away to other AI models.



It recently expanded AI Overviews - summaries that appear

atop the traditional hyperlinks to relevant webpages on a search

query - for users in more than 100 countries, and added

advertisements to feature, boosting Search ad sales.



CEO Sundar Pichai said in a testimony at an antitrust trial

last month that Google hopes to enter an agreement with Apple by

the middle of this year to include its Gemini AI technology on

new phones.



Apple's Cue on Wednesday also said the company would add AI

search providers, including OpenAI and Perplexity AI, as search

options in the future, Bloomberg reported.



"(Apple's plan) also shows how far generative search sites,

such as ChatGPT and Perplexity have come," said Yory Wurmser,

principal analyst for advertising, media & technology at

eMarketer.



That Google is willing to pay tens of billions of dollars to

remain the default search engine shows how crucial the

agreements are, Wurmser said.



For instance, ChatGPT in April reported seeing over 1

billion weekly web searches. It has more than 400 million weekly

active users, as of February.