Alphabet shares fell on Wednesday, after Apple’s Senior Vice President of Services, Eddy Cue signaled an important shift in online search.
Cue said during federal court testimony, that search engines powered by artificial intelligence (AI), could replace Google and other traditional search tools in the near future. This statement shook investors’ confidence and cast doubt on their long-standing relationship.
Cue, who spoke in Washington’s US District Court during the Department of Justice antitrust lawsuit against Alphabet’s parent, Google, revealed that Apple was exploring the integration of AI search tools, such as OpenAI and Anthropic into the Safari browser.
This testimony is part of a larger government effort to examine Google’s alleged behavior as monopolist in digital advertising and the search engine market.
Alphabet share prices down by more than 8 percent
Alphabet’s shares fell more than 8% as a result of the comments, and the ongoing legal pressure. Apple stocks dropped around 2% in the same trading day.
This case has now entered a crucial phase, as the court is evaluating potential sanctions against Google. Google was previously found to have broken antitrust laws through its illegal dominance of advertising technology markets.
Google’s practice of paying platforms owners, including Apple, to have their default search engine remain on devices is at the heart of the case.
According to testimony, Google has paid Apple up to $20 billion per year as of 2022 for maintaining its default status in Safari. This deal benefits both parties by directing high-traffic search through Google’s engine powered by ads and returning to Apple a significant revenue share.
Cue’s testimonies hinted that the dynamics were changing.
He admitted that he was worried about the future of the Google partnership, and had “lost his sleep” because of potential revenue losses if Google were to become the default option for search.
He also affirmed, in a nutshell, that Google will remain the default search engine, for the time being, due to its high quality.
Cue revealed that Safari saw a decline in searches for the first-time this April. He attributed it to users increasingly using AI to answer their questions.
The new platforms offer more accurate and contextually-aware results than the traditional keywords-based search engines. This could be a game changer for users’ interactions with websites.
Apple’s willingness to add multiple AI-based search options in Safari indicates that it could soon be able to break its exclusivity with Google.
This move, if implemented, could impact Google’s advertising revenues and create new competition in the AI search engine market.
The original version of this post Alphabet’s (GOOG) share price drops as Apple’s Eddy Cue signals AI driven shift in search online may change as new information becomes available.
This site is for entertainment only. Click here to read more
