Shares of both Apple Inc. and Alphabet Inc. fell sharply on Wednesday as investors reacted to news that Apple is actively exploring the integration of AI-powered search engines into its Safari browser-a move that could disrupt Google’s longstanding dominance as the default search provider on Apple devices.
Alphabet’s stock (GOOGL) plunged nearly 8%, dropping to $150.50, while Apple shares slipped almost 2% to $195.00. The selloff followed testimony from Apple’s Senior Vice President of Services, Eddy Cue, during a high-profile antitrust trial examining Google’s search practices.
Cue revealed that Apple is “actively looking at” reshaping Safari to focus on AI-driven search engines, citing both the changing technology landscape and the potential fallout from its estimated $20 billion-a-year deal with Google.
The revelation comes as Safari’s search usage declined for the first time in April, a shift attributed to users increasingly turning to AI tools for information. Cue indicated that Apple is evaluating several AI search providers-including OpenAI, Perplexity AI, and Anthropic-as potential additions to Safari.
While Google’s search engine has long been a major revenue generator for Alphabet, any move by Apple to diversify its search options or reduce its reliance on Google could have significant financial implications, particularly for Alphabet’s core advertising business.
Investor concerns were further heightened by Cue’s remarks that AI search providers could eventually replace traditional search engines like Google.
He noted that while these AI options may not immediately become the default, their rapid technological advancements could prompt users to switch, especially as features improve and competition intensifies.
The broader market also felt the impact, with Alphabet’s stock decline dragging down major indices and signaling heightened uncertainty across the tech sector. Analysts warn that the potential shift in Apple’s search strategy could trigger a fundamental change in the search and advertising landscape, challenging Google’s market share and opening the door for new AI-driven competitors.
As Apple continues to explore new AI partnerships and Alphabet faces mounting regulatory scrutiny, the tech industry is bracing for further disruption. Investors will be closely monitoring both companies’ next moves, as well as the evolving dynamics of AI-powered search and its implications for the future of digital advertising and user experience.