Apple’s AI Search Ambitions Threaten Google’s Online Dominance

A major shake-up may be on the horizon in the world of online search, as Apple prepares to integrate AI-powered search options directly into its Safari browser. The move signals a potential blow to Google’s long-standing dominance, especially given the search giant’s heavy reliance on iPhone users for a significant slice of its advertising revenue.

The news, first reported by Reuters, sent shockwaves through the market, wiping approximately $150 billion off the market value of Google’s parent company, Alphabet, after its shares fell 7.3% in a single day.

AI Reshaping the Search Landscape

According to sources familiar with the matter, Apple executive Eddy Cue revealed during a U.S. antitrust trial on Wednesday that the company is “actively looking at” redesigning Safari’s search functionality, with an eye toward AI integration. Cue noted that, for the first time, Safari search activity declined last month as users increasingly turned to AI-driven tools for their search needs.

While Google has pushed back, claiming continued growth in overall search queries — including those from Apple devices — the signs of a shifting landscape are hard to ignore. Google highlighted the growth of voice and visual search features as key contributors to its traffic numbers but stopped short of directly addressing Cue’s comments about AI displacing traditional search.

Billions at Stake in a High-Stakes Battle

At the heart of this rivalry lies a multibillion-dollar agreement: Google currently pays Apple an estimated $20 billion a year to remain the default search engine on Safari. That represents roughly 36% of Google’s search advertising revenue from Safari alone, according to analysts.

This financial arrangement has become a focal point in the U.S. Justice Department’s ongoing antitrust case against Google, with regulators proposing remedies such as banning default search engine deals altogether.

“The loss of exclusivity at Apple should have very severe consequences for Google even if no further regulatory measures are taken,” said Gil Luria, an analyst at D.A. Davidson. He added that many advertisers might diversify their ad budgets away from Google if viable alternatives became widely available.

Google Fights Back with AI

While some have dismissed Google as lagging behind in the AI race, particularly after OpenAI’s ChatGPT exploded onto the scene in late 2022, the search giant has since doubled down on its AI initiatives. Google launched an “AI mode” within its search interface earlier this year and has rolled out AI Overviews — AI-generated summaries placed above conventional search results — to over 100 countries, complete with integrated ads.

Additionally, Google is reportedly hoping to finalize a deal with Apple to bring its Gemini AI technology to new iPhones by mid-2025, according to CEO Sundar Pichai’s recent court testimony.

New Players Enter the Arena

Perhaps most telling of the shifting tides is Apple’s plan to offer AI search alternatives from companies like OpenAI and Perplexity AI as future search providers within Safari. This marks a significant milestone for generative AI platforms, demonstrating just how rapidly their capabilities — and market influence — have evolved.

“It also shows how far generative search platforms like ChatGPT and Perplexity have come,” said Yory Wurmser, principal analyst at eMarketer. He noted that Google’s willingness to spend tens of billions to retain its default status illustrates how vital these agreements are to its business.