Alphabet Shares Slide as Apple Seeks AI Alternatives to Google Search
TL;DR
- Alphabet Inc.’s share prices dropped over 6% following news that Apple is considering AI-powered search alternatives for its Safari web browser.
- Apple's Eddy Cue testified in an antitrust trial revealing Safari's search volume had declined amid rising AI competition.
- The potential shift raises concerns about Google's advertising revenue, already bolstered by a substantial agreement with Apple.
- Investors are wary as Google aims to stay competitive in the fast-evolving AI search market.
In a significant development poised to disrupt the search engine landscape, Alphabet Inc. (NASDAQ: GOOGL) witnessed its shares tumble by more than 6% on May 7, 2025, as news broke that Apple Inc. (NASDAQ: AAPL) is exploring incorporating artificial intelligence (AI) capabilities into its Safari web browser. This move marks a potential challenge to Google’s long-held dominance in search, a sector crucial for Alphabet's advertising revenue.
Apple Explores AI Alternatives
During testimony in a U.S. Department of Justice antitrust trial against Google, Apple’s senior vice president of services, Eddy Cue, indicated that Safari has seen a drop in search usage for the first time, attributing this trend to the emergence of AI-powered search options from competitors such as OpenAI, Perplexity, and Anthropic. Cue noted, "Prior to AI, my feeling around this was, none of the others were valid choices. I think today there is much greater potential because there are new entrants attacking the problem in a different way"[^7].
This declaration aligns with growing concerns among investors regarding Alphabet’s future revenue streams, particularly as Apple's ability to shift its default search methods could significantly affect Google's earnings. Currently, Google pays Apple an estimated $20 billion annually to be the default search engine on Safari—a lucrative relationship that has fortressed Apple's Services segment, which accounted for a substantial portion of its operating income in recent years[^3].
Market Reactions and Future Implications
The immediate market reaction reflected investor anxiety; Alphabet's shares plummeted approximately 8.5% at one point during the trading day, with a loss of around $140 billion in market capitalization since Tuesday's close[^6]. Apple’s stock also fell, declining about 2.1% amid the mounting uncertainty and pressure surrounding its strategic decisions.
Investors are increasingly uneasy about the long-term viability of Google's advertising revenue if Apple actively moves towards alternatives that could potentially compete with Google's search capabilities. Cue's remarks during the trial have suggested that as users are drawn to AI-driven tools, Google's established model may face challenges unlike any seen in its two-decade history[^4].
The Broader Impact of AI on Search
The implications of this strategic shift go beyond just market shares; they indicate a significant industry trend towards new technologies in search functionalities. Analysts suggest that if Apple successfully integrates robust AI search options, it could reshape user behavior and expectations, leading to a broader reevaluation of online search strategies across platforms.
With technology giants competing for supremacy in the AI sector, Google has responded vigorously, testing its own AI enhancements while ensuring that it remains competitive with emerging alternatives. The introduction of Gemini, Google's AI search product, is part of its reaction to this growing trend, although it remains to be seen how effective these advancements will be in light of Apple's new direction[^2].
Conclusion
As Apple navigates its potential transition to AI-powered search engines, all eyes will be on how this shift may alter the dynamics of the search market. Alphabet, historically the industry benchmark, must now contend not only with its competition but also with the evolving expectations of consumers yearning for more intelligent search solutions. The ultimate outcome of this competition may significantly redefine the future of online search and advertising.
References
[^1]: "Alphabet stock falls amid Apple AI search plans". Financial Times. Published May 7, 2025. Retrieved October 7, 2025.
[^2]: "Google stock sinks on report Apple plans to integrate AI search into Safari browser". Yahoo Finance. Published May 7, 2025. Retrieved October 7, 2025.
[^3]: "Apple Eyes AI-Powered Search In Browser As Fate Of $20B Google Deal Hangs In The Balance". Stocktwits. Published May 7, 2025. Retrieved October 7, 2025.
[^4]: "Apple, Alphabet Shares Tumble Amid Potential AI Search Shift". Benzinga. Published May 7, 2025. Retrieved October 7, 2025.
[^5]: "Google's parent company Alphabet shares plunge over 8% amid AI search competition, malware threats". Times of India. Published May 7, 2025. Retrieved October 7, 2025.
[^6]: "Apple's Cue says iPhone maker exploring adding AI search as queries fall". Seeking Alpha. Published May 7, 2025. Retrieved October 7, 2025.
[^7]: "Alphabet shares slide as Apple seeks AI alternatives to Google search". Financial Times. Retrieved October 7, 2025.
Keywords: Alphabet, Apple, AI search, Google, Eddy Cue, stock market, Safari, competition, advertising revenue