Source: Wall Street Journal.
$Alphabet-A (GOOGL.US)$ The era dominated by search engines may be coming to an end. $Apple (AAPL.US)$ In April, browser search applications declined for the first time. Apple is "actively considering" a major overhaul of its Safari browser on its devices, shifting focus to AI-driven Search Engine. This decision may end years of cooperation between Apple and Alphabet-A, prompting a significant shift in the entire Industry and challenging Google's dominance in the search field.
On Wednesday during Regular Trading Hours, the stock price of Google's parent company Alphabet plummeted, with losses rapidly expanding, at one point dropping over 9%. Apple's stock price turned negative during the day, with intraday losses exceeding 2%. The declines of Google and Apple caused the Large Cap to fall, with the Nasdaq 100 turning negative during trading, after gaining 1% in Post-Market Trading the previous day.
In news, Apple is "actively considering" a major overhaul of its Safari browser on its devices, focusing on an AI-driven Search Engine. This decision may end years of collaboration between Apple and Alphabet-A, triggering significant changes in the entire Industry and posing a serious challenge to Google’s dominance in the search field. The era of search dominated by Google may indeed be coming to an end.
Eddy Cue, Apple's Senior Vice President of Internet Software and Services, revealed the news while testifying on Wednesday in an antitrust lawsuit filed by the USA Department of Justice against Google's parent company Alphabet.
The core of the lawsuit by the USA Department of Justice is an agreement between Apple and Alphabet-A, valued at about $20 billion a year, which makes Google the default Search Engine on Apple devices. If they lose the case, it may force these two technology giants to terminate their partnership, disrupting the long-standing running ways of devices such as the iPhone.
AI Search Entry.
The acceptance of AI among consumers is also continuously increasing. Eddy Cue pointed out that the search volume in the Safari browser saw a decline for the first time in April this year, attributing this to users turning to AI.
Eddy Cue stated that he believes AI search providers, including OpenAI, Perplexity, and Anthropic, will ultimately replace traditional Search Engines like Google. He thinks Apple will include these companies as options in Safari in the future:
We will add them to the list, but they may not become the default option. These products still need further improvement.
Before the emergence of AI, I thought other search options were unreliable. And now I feel there is greater potential because new players are solving this issue in different ways.
Currently, Apple offers OpenAI's ChatGPT as an optional feature in Siri, with an agreement allowing Apple to include other AI providers in its operating system, including its own.
Before ChatGPT was selected last year as part of 'Apple Intelligence' in iOS 18, Apple also conducted a 'pitch' with Google. Cue said that Google provided a list of terms at that time, 'which had many items that Apple could not accept, and these items do not exist in the agreement with OpenAI.'
Cue mentioned that Apple has also explored Anthropic, Perplexity, China's DeepSeek, and Grok, the AI from Musk's xAI. Cue specifically noted that Apple has had some discussions with Perplexity. Additionally, Cue expects to join Google's AI search product Gemini later this year.
Cue pointed out that AI Search Engine needs to improve its search index to truly enhance performance. However, even if these improvements cannot be rapidly implemented, some of its other features are already 'strong enough to make users willing to switch.' Regarding the transition from traditional search to AI search, Cue remarked, 'Now that there is ample capital and the size of players is considerable, I don't see a reason why this shift wouldn't happen.'
Cue also stated that large language models will continue to improve, further prompting users to change their usage habits.
Review of old partnerships
Nevertheless, Cue still believes that Google should continue to act as the default search engine for Safari, admitting that he had insomnia worrying about losing the revenue share from this agreement. He stated that the current agreement Apple has with Google for regular search still has the most optimal financial terms.
Last year, Apple and Google expanded their collaboration by integrating Google Lens into the latest iPhone's 'visual intelligence' feature, allowing users to take photos and analyze images through Google's AI.
Cue also mentioned that Apple is collaborating with$Microsoft (MSFT.US)$The agreement for Bing, a subsidiary, has recently been modified to a yearly renewal format. Bing is the non-default option in Safari.
Cue stated in court that the pace of technological change is so rapid that in a few years people may no longer use the devices we have now:
You may not even need an iPhone in ten years, even though that sounds crazy. Real competition only arises when technology changes. Technological transformation creates opportunities. AI is a new technological change that is creating new opportunities for newcomers.
How does the market interpret this?
Media analysis states that as a significant transformation, this is highly significant for the iPhone and Apple, which have over 2 billion active devices. Since the launch of the first iPhone in 2007, users have relied on the Google Search Engine to access the Internet. Now, users will enter a new search era dominated by multiple AI companies.
The market views Eddy Cue's testimony as a signal of challenges faced by both Alphabet and Apple, as they may have to abandon this lucrative arrangement. This also explains why, in addition to Google's sharp decline on Wednesday, Apple's stock price also experienced a drop of over 2% at one point.
Apple's own AI technology has lagged behind its peers. The company does not yet have its own AI Search Engine and has been forced to postpone major upgrades to Siri, which were originally planned to use users' personal data to assist in completing queries. Apple will hold its annual developer conference on June 9, during which it plans to launch an improved version of its AI platform 'Apple Intelligence.'
Editor/Rocky
