Alphabet Inc. shares fell sharply Wednesday after Apple revealed it 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 (GOOG) dropped over 7% in morning trade, sliding to $151.21-a significant decline that brings the stock closer to its 52-week low.
The selloff comes amid mounting concerns that Apple’s potential shift toward artificial intelligence search partners could erode a key revenue stream for Google, which has historically paid Apple billions annually to remain the default search engine on iPhones, iPads, and Macs.
The development was confirmed by Apple’s Senior Vice President of Services, Eddy Cue, during testimony in the ongoing U.S. Justice Department lawsuit against Alphabet. Cue stated that Apple is “actively looking at” reshaping Safari to focus on AI-powered search engines, citing both the potential fallout from its lucrative $20 billion-a-year deal with Google and broader industry shifts toward artificial intelligence.
Apple’s consideration of alternative AI search providers marks a significant shift in the tech landscape. The company has already begun partnering with AI leaders like OpenAI to enhance Siri’s capabilities, and is now evaluating options to add providers such as Perplexity and Anthropic to the Safari search lineup.
While these providers may not immediately replace Google as the default, their inclusion could diversify user options and further diminish Google’s search traffic on Apple devices.
Adding to the pressure, Apple disclosed that searches through Safari fell for the first time ever in April, signaling a change in user behavior as more individuals turn to AI-driven tools for information.
This trend threatens to reduce the ad revenue Apple earns through its partnership with Google, while also putting Google’s search business under increased competitive and regulatory scrutiny.
Industry analysts note that Google remains a leader in artificial intelligence, with its Gemini AI chatbot boasting hundreds of millions of active users globally. However, the prospect of losing default placement on Apple devices-a critical gateway for billions of searches each year-poses a significant risk to Alphabet’s core advertising business.
As Apple continues to explore new AI partnerships and Google faces ongoing antitrust challenges, the search landscape is poised for further disruption. Investors will be closely watching the next moves from both tech giants, as well as the potential impact on their financial performance and market positions in the months ahead.