Google loses $150B in value after Apple signals AI search shift

Apple’s plans to integrate AI-powered search options into its Safari browser represent a major threat to Google, whose multibillion-dollar advertising business depends heavily on iPhone users conducting searches through its engine.

The development sent shares of Google-parent Alphabet tumbling 7.3% on Wednesday, erasing roughly $150 billion from its market value.

Apple and Google logos.

The iPhone maker is “actively looking at” reshaping Safari, a source familiar with the matter told Reuters, citing Apple executive Eddy Cue’s testimony in an antitrust case over Google’s dominance in online search.

Cue reportedly told the court that Safari searches declined for the first time last month as users increasingly turned to AI tools. Apple’s own shares slipped 1.1% on the day.

Google, in a blog post responding to the news, said it continues to see growth in overall search queries, including “total queries coming from Apple’s devices and platforms.”

“People are seeing that Google Search is more useful for more of their queries — and they’re accessing it for new things and in new ways,” the company wrote, pointing to voice and visual search features as key contributors to that growth. It remains unclear, however, whether Cue’s comments were based on comparable metrics.

Still, his remarks suggest a broader shift underway—one that could threaten Google’s search dominance. That dominance has already come under legal scrutiny in the U.S., where the Justice Department has filed two major antitrust lawsuits against the company.

Google currently pays Apple an estimated $20 billion annually to remain the default search engine on Safari—a figure that represents around 36% of Google’s search ad revenue generated through the iPhone browser, according to analyst estimates.

The Justice Department has proposed banning Google from making such default placement deals as part of potential remedies to reduce its dominance.

“The loss of exclusivity at Apple should have very severe consequences for Google, even if there are no further measures,” said Gil Luria, an analyst at D.A. Davidson. “Many advertisers have all of their search advertising with Google because it is practically a monopoly with almost 90% share. If there were other viable alternatives for search, many advertisers could move much of their ad budgets away from Google.”

Google is not without defenses. Long perceived as trailing in the AI race after ChatGPT’s launch in late 2022, the company has since committed significant resources to AI development, leveraging its extensive data troves.

Earlier this year, it introduced an “AI mode” on its search page and expanded its AI Overviews—automated summaries that appear above traditional search results—to users in over 100 countries. Google also began adding ads to these overviews, bolstering its Search ad business.

CEO Sundar Pichai said in testimony last month that Google hopes to strike a deal with Apple by midyear to incorporate its Gemini AI model into future iPhones.

Meanwhile, Apple’s Cue confirmed Wednesday that the company plans to add new AI-powered search providers to Safari, including OpenAI and Perplexity AI, Bloomberg reported.

“This also shows how far generative search sites, such as ChatGPT and Perplexity, have come,” said Yory Wurmser, principal analyst at eMarketer. The fact that Google is willing to pay tens of billions to remain the default, Wurmser added, “shows how crucial the agreements are.”

ChatGPT’s reach is quickly expanding: in April, it reported over 1 billion weekly web searches through its AI-powered search feature, and as of February, it had more than 400 million weekly active users.