Google Faces Market Jitters as Apple Points to AI-Driven Decline in Searches

The threat to Google's long-standing dominance in search may be affecting its user base. Signals point to changing user behavior. At a federal antitrust trial, Apple executive Eddy Cue testified that for the first time ever, searches through Apple's Safari browser dropped last month. According to Cue, more and more people are now using AI tools to find information, rather than traditional search engines like Google's. The testimony moved the market, with Google's stock diving over 9% in the afternoon after the news came out. It also highlights the high stakes of the relationship between the two companies, which has Google paying Apple more than $20 billion a year to be the default search engine on its devices.

AI Rivals Gain Ground

The sharp drop in Safari searches coincides with the rising fame of AI search alternatives like OpenAI, Perplexity AI Inc., and Anthropic PBC. These are much more powerful alternatives to what you get in a standard search engine, explained Cue. In a not-so-distant future, he sees Apple using these AI platforms as search options in Safari. But don't expect them to take over from Google as the number one choice anytime soon.

Google’s Push Into AI

Under relentless pressure, Google has been turning sharply toward AI, integrating its Gemini AI engine into the core search business. The company now works to transform conventional searches into AI-powered query responses, but with mixed results thus far. Despite the early hiccups and public ridicule, including the infamous "glue pizza" incident, Google has kept pushing the narrative that its AI enhancements are yielding positive results. During the latest earnings call, CEO Sundar Pichai told analysts that AI Overviews drive increased search usage, with users finding the search experience more rewarding and nearly comprehensive.

Google Must Speed up Innovation

Apple's revelation has fanned the flames of fear that the foundation of Google search, which is the foundation of its $2 trillion valuation, could be in for some long-term trouble. We now need to consider the very real possibility of AI search engines steadily encroaching on Google's territory. And while Apple's current stance is to keep AI engines as optional add-ons and not as default options, the trajectory seems to be toward a use case where, in increasing numbers, we sidestep the kind of searches for which we currently rely on Google. For Google, all of this means the imperative to reassure us that it's not just innovating but also adapting—reassuring these investors, in particular, that in a very fast-evolving digital landscape, it won't be left behind.