Apple wants to move to AI-powered search — and Google stock sinks 8%

Apple is reportedly exploring deals with AI-driven search engines, leaving Google investors nervous

We may earn a commission from links on this page.
Image for article titled Apple wants to move to AI-powered search — and Google stock sinks 8%
Photo: Peter Nicholls (Getty Images)
In This Story

Apple Inc. (AAPL-0.39%) is exploring how to incorporate AI-powered search engines on its devices — and it’s sending Google’s (GOOGL-1.57%) share price tumbling.

Eddy Cue, Apple’s senior vice president of services, revealed that the company is “actively looking at” how to fold AI into its existing Safari browser, Bloomberg reports. The comments were made during Cue’s testimony in the U.S. Justice Department’s lawsuit against Alphabet Inc. on Wednesday.

Advertisement

Inquiries into Safari had dropped for the first time in April, he said. This aligns with a wider shift in consumer behavior, whereby users are increasingly turning to large-language models for answers.

Advertisement

Alphabet’s share price fell 8% on Wednesday, following Cue’s comments.

Cue foresees the start-ups behind AI-generated search, like OpenAI, Perplexity AI Inc. and Anthropic PBC, inevitably usurping the traditional search tools, such as Google or Bing (MSFT-0.92%).

Advertisement

Currently, OpenAI’s ChatGPT is offered as an option in Siri, and Apple is set to add Google’s Gemini later this year. But Cue says this is just the start. He expects Apple to incorporate various AI engines into Safari in the future, offering users the chance to pick between them.

“We will add them to the list — they probably won’t be the default,” he said. Talks between Apple and Perplexity are already underway, he disclosed. “Prior to AI, my feeling around this was, none of the others were valid choices,” he said. “I think today there is much greater potential because there are new entrants attacking the problem in a different way.”

Advertisement

Another reason for the revamp: Apple’s relationship with Google is in jeopardy. The DOJ’s lawsuit against Alphabet centers on an estimated $20 billion-a-year deal between Apple and Google. The partnership makes Google the default search engine in Safari, Apple’s native browser.

But Cue recognized that the companies behind AI-engines still have some way to go in developing their products. Specifically, their search indexes, which refers to a data structure that determines how effective engines are at retrieving relevant information. However, irrespective of teething issues, Cue asserted that the features offered by AI tools are just “so much better that people will switch.”

Advertisement

While an array of chatbots may soon be folded into Apple’s products, Cue concluded that Google should remain the default search option. Apple’s revenue share from their agreement remains the most financially appealing option, he said.