Google Stock Slides as Apple’s AI Search Plans Revealed in Court

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Stock Slides as Apple’s AI Search Plans Revealed in Court

Apple’s (NASDAQ:) senior vice president of services, Eddy Cue, revealed during court testimony that the company is actively exploring a shift toward AI-powered search in its Safari browser, causing Alphabet (NASDAQ:) shares to plummet and raising questions about the future of the lucrative

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-Apple search deal.

Apple Signals Major Shift Toward AI Search

During testimony in the US Justice Department’s antitrust lawsuit against Alphabet Inc., Apple’s Eddy Cue made significant revelations about the company’s search strategy. Cue noted that Safari browser searches declined for the first time last month as users increasingly turn to AI alternatives.

He explicitly stated his belief that AI search providers like OpenAI, Perplexity AI, and Anthropic will eventually replace traditional search engines like

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.

“There’s enough money now, enough large players, that I don’t see how it doesn’t happen,” Cue said regarding the transition from standard search to AI. He explained that even if AI search indexes need improvement, these new platforms offer features that are “so much better that people will switch.”

Apple already offers OpenAI’s ChatGPT as an option in Siri and plans to add

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’s (NASDAQ:) Gemini later this year. The company has also explored partnerships with Anthropic, Perplexity, DeepSeek, and Grok. While Cue indicated Apple will add AI search providers as options in Safari, he cautioned they “probably won’t be the default” yet.

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-Apple $20 Billion Search Deal Under Scrutiny

The heart of the Justice Department’s case centers on the estimated $20 billion annual deal making

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the default search engine in Safari. Despite his enthusiasm for AI alternatives, Cue admitted he still believes

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should remain Safari’s default search engine due to superior financial terms.

He revealed he has “lost sleep over the possibility of losing the revenue share” from the

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agreement. Last year, the companies expanded their partnership to include

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Lens integration in the iPhone’s Visual Intelligence feature, allowing users to analyze images using

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’s AI.

The court testimony also shed light on internal negotiations. Before selecting ChatGPT for Apple Intelligence in iOS 18, Apple conducted a “bake-off” with

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According to Cue,

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had provided a term sheet with conditions “Apple wouldn’t agree to and didn’t agree to with OpenAI.” Meanwhile, Apple’s agreement with

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’s (NASDAQ:)

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, a non-default option in Safari, was recently amended to operate on a year-to-year basis.

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’s Parent-Company Alphabet Shares Plunge

News of Apple’s potential strategic shift had immediate financial consequences. Alphabet shares tumbled as much as 7% on Wednesday, with the stock trading at $152.45, down $12.75 (7.72%) as of 12:11 PM EDT. The decline was significantly higher than the broader market, with trading volume reaching 29.4 million compared to an average of 22.2 million.

Apple shares weren’t immune either, slipping as much as 2.5% following Cue’s testimony. The Index briefly turned negative, erasing earlier gains that had topped 0.5%.

The market reaction underscores the significance of the

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-Apple search deal to both companies.

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’s year-to-date performance now stands at -19.85%, substantially underperforming the S&P 500’s -4.49%. Despite current volatility, analyst price targets for Alphabet remain optimistic, with an average target of $200.79 compared to the current trading price.

***

Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our

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prior to making financial decisions.

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#Stock #Slides #Apples #Search #Plans #Revealed #Court

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