The parent company of a prominent technology brand – Alphabet Inc. (Google’s parent company), watched its stock value down by a whopping 7.3% on May 7, 2025. The closing price was registered at $163.23 the day before, and at the end of the trading day, it was only $151.38, a significant decrease in the stock price. The sudden fall resulted from a Bloomberg piece of news that Apple is working on integrating AI-driven search engines into the Safari web browser. The confirmation by Eddy Cue, a senior officer of Apple in the service department, during the case of the U.S. Justice Department versus Google, has heightened fears of the search giant having the same kind of business only with Apple shortly.
AI Search Becomes Apple’s Point of Interest
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In his statement, Eddy Cue suggested that Apple wants to be a “fast mover” in the direction of AI-led search. He mentioned that the change would drive the whole market, quickly completely remodeling the sector. The tech giant is weighing the advantages of collaboration with many AI search engines, including, among others, OpenAI, Perplexity AI, and Anthropic, as well as a few made in China, like DeepSeek and Elon Musk’s xAI Grok. At the same time, he clarified that AI search engines are the ones that “probably won’t be the default” in the first place and that their further perfection through evolution is a prerequisite. Nevertheless, he was very assured about how things could go, insisting that AI generation would replace traditional search engines.
CNBC, an American pay-TV channel, disclosed the rumored signing of an agreement between Google Inc. and Apple about the former paying the latter an estimated annual sum of $20 to be the Safari web browser’s default search engine. The potential switch from web-based to AI search may drastically affect Google’s search traffic, leading to the direct decline of its advertising revenue, which is the core of Alphabet’s financial strength.
| Key Details | Information |
| Stock Impact | GOOGL closed at $151.38 on May 7, 2025, down 7.3% from $163.23. |
| Low of the Day | $147.949 during trading. |
| Apple’s Plan | Integrate AI search providers like OpenAI, Perplexity, and Anthropic into Safari. |
| Google’s Deal | Pays Apple ~$20 billion/year to be Safari’s default search engine. |
| Antitrust Context | U.S. Justice Department lawsuit against Google’s search practices. |
Current AI Integrations and Strategic Moves
Apple has started employing AI in various areas of its business. For instance, ChatGPT of OpenAI has already been integrated into Siri, and Apple claimed that in 2025, they would add Google’s Gemini. It should be noted that Apple compared three solutions, the winner of which was ChatGPT for the Apple iOS 18 feature. The Account Manager from Google declined, giving the terms of Google to ZDNet. This emphasizes Apple’s readiness to be free to choose among third-party entities for their needs.
In another development, Apple entered into a more inclusive agreement with Google, whereby Google Lens is now a part of Visual Intelligence features in the latest iPhones. On the other hand, the company’s cooperation with Bing is currently a risk-managed decision that offers Microsoft a yearly contract for its solutions. These actions show that Apple wants to build a multi-modal search ecosystem where Google remains its mainstay, but it does not matter if Microsoft gets a little market share.
Market Reaction and Financial Implications
Stanley Kumar’s witness stand appearance instantly drew the market’s response. Alphabet’s stock price dropped rapidly during the trading session to as low as $147.949, but then it gained some value and closed at $151.38. This slide wiped out much of Alphabet’s market capitalization, signaling the market’s vulnerability to Google’s search dominance threats. Apple’s shares went down, too, showing a decrease of 2.7%, reflecting the investors’ doubt about the tech giants’ partnership restructuring.
Regarding Alphabet, the financial consequences are noteworthy. Apple’s insistence on Google being its default search engine in Safari, allowing Google to obtain enormous revenue from advertising, is one of the primary sources of the company’s earnings. The information was given in Axios.
Antitrust Lawsuit and Regulatory Context
According to the source, Cue’s testimony forms only a part of a lawsuit that the U.S. Justice Department brought against Google in which the government alleges that the company is unlawfully monopolizing the online search market using exclusive contracts like the one with Apple. The lawsuit would mean that Google could be ordered to disentangle its $20 billion pact with Apple if it wins the lawsuit. The case is ground zero of structural change for the tech industry. A win for the plaintiffs would tear apart the market’s traditional structure and create spaces for new competitors.
Such a hearing has already disclosed the most vulnerable points of the Google-Apple deal. According to the documents revealed in 2024, Google paid Apple $20 billion in 2022 to keep its default search status, as reported to Bloomberg. Moreover, in a statement to CNBC in 2023, the CEO of Alphabet, Sundar Pichai, confirmed that Google gives Apple 36% of Safari search revenue.
Implications for Google and Apple
Google would face a massive danger if its default search position in Safari were to be compromised. Alphabet, the parent company of Google, earns most of its money from search advertising, and a decrease in search volumes might result in substantial financial difficulties. Furthermore, if Apple comes up with AI search features capable of pulling the crowd, Google’s market share will be influenced, and other phone makers might follow the same path. Consequently, Google’s market share erosion process would accelerate.
Additionally, Apple’s shift to AI search is an auspicious affair, as it will improve the user experience and decrease reliance on Google. Through AI-driven search, Apple has the potential to grab more customers and retain them, thus capturing a piece of the cake from the advertising market. Besides, Apple’s announcement that it will give Siri access to personal data will likely be a central talking point at WWDC21, suggesting a much broader commitment to AI improvement in the company, which has been less evident than that of other companies.
Presumed Development
While the future of search on Apple devices is not guaranteed, judging by Cue’s testimony, something fundamentally revolutionary is occurring. Though Google stands to be the leading search engine in the short run, undoubtedly mainly due to the enormous revenue it generates for Apple, AI search becoming integrated could completely change that. The sources of AI, in the form of Perplexity and Anthropic, revolutionizing the search engine sector talent is one of the article’s main conclusions, as well as the vanishing of traditional search engines that might be needed to adapt to remain ubiquitous.
With initiatives like Bard and Gemini, Google has been investing heavily in AI, but integrating third-party AI search into Safari could accelerate the need for further innovation. At the same time, the results of the antitrust lawsuit will either become the determinant that will shape the connection between Apple and Google in the future or significantly impact the search market at large.
Conclusion
The immediate fall in Alphabet’s stock price on May 7, 2025, indicates the market’s mindset about the threat Apple might pose by getting into an AI search through Safari. The development of the antitrust trial against Google will give more news about the project and its impact on the tech industry. During this time, the market is expected to closely monitor the situation as the development could change the competitive dynamics of online search and AI technology.
Disclaimer: This article is for informative purposes only and should not be taken as financial advice. It is always better to take advice from a qualified financial advisor before you proceed with the investment.
