Cue’s court comments renew scrutiny on $20bn Google–Apple deal and rattle investors
Alphabet Inc (NASDAQ:GOOG) shares fell 7.51% to US$152.80 on Wednesday after Apple executive Eddy Cue said AI tools like ChatGPT and Perplexity could replace traditional search engines in Safari—casting doubt on Google’s lucrative status as the iPhone’s default search provider.
Cue, Apple’s Senior Vice President of Services, made the remarks during testimony in a federal antitrust trial against Alphabet. He revealed that Apple is actively exploring the integration of AI-based search options—including services from OpenAI, Anthropic, and Perplexity—into future versions of its Safari browser.
The revelation comes as the Justice Department presses its case that Google has maintained an illegal monopoly over search and search advertising by locking in default status through exclusive agreements. Central to the trial is Google’s longstanding deal with Apple, which reportedly paid Apple as much as US$20 billion in 2022 to remain the default search engine across iOS devices.
Cue confirmed that Apple is not planning to build its own search engine, but acknowledged that the landscape is shifting. He noted that Safari searches declined for the first time in April—attributing the drop to the growing popularity of AI-driven alternatives. Despite expressing personal unease at the prospect of losing the Google deal—saying he had “lost sleep” over it—Cue indicated that the company is preparing for a future in which traditional web search plays a reduced role.
The market reaction was swift. Alphabet shares slumped more than 7% on fears that the company’s search dominance—and its core advertising revenue—could be undermined. Google has already been racing to adapt, rolling out its Gemini AI engine and testing a separate AI-powered search experience. But Wednesday’s testimony appeared to highlight the fragility of its current moat.
Apple shares also dipped 1.14% to US$196.25, with analysts noting that any disruption to its search partnership could weigh on its Services revenue, which reached US$96.1 billion last year.
While neither company has announced changes to the existing arrangement, the shift in tone suggests both are bracing for an AI-driven transformation of the search landscape—and possibly, a regulatory reckoning.
