Apple’s AI Search Plans Revealed in Court, Sends Google Stock Tumbling

Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.Apple’s (NASDAQ: AAPL) senior vice president of services, Eddy Cue, revealed during court testimony that the company is actively exploring a shift toward AI-powered search in its Safari browser, causing Alphabet shares to plummet and raising questions about the future of the lucrative Google-Apple search deal.Apple Signals Major Shift Toward AI SearchDuring testimony in the US Justice Department’s antitrust lawsuit against Alphabet Inc., Apple’s Eddy Cue made significant revelations about the company’s search strategy. Cue noted that Safari browser searches declined for the first time last month as users increasingly turn to AI alternatives. He explicitly stated his belief that AI search providers like OpenAI, Perplexity AI, and Anthropic will eventually replace traditional search engines like Google.“There’s enough money now, enough large players, that I don’t see how it doesn’t happen,” Cue said regarding the transition from standard search to AI. He explained that even if AI search indexes need improvement, these new platforms offer features that are “so much better that people will switch.”Apple already offers OpenAI’s ChatGPT as an option in Siri and plans to add Google’s (NASDAQ: GOOG) Gemini later this year. The company has also explored partnerships with Anthropic, Perplexity, DeepSeek, and Grok. While Cue indicated Apple will add AI search providers as options in Safari, he cautioned they “probably won’t be the default” yet.Join our Telegram group and never miss a breaking digital asset story.Google-Apple $20 Billion Search Deal Under ScrutinyThe heart of the Justice Department’s case centers on the estimated $20 billion annual deal making Google the default search engine in Safari. Despite his enthusiasm for AI alternatives, Cue admitted he still believes Google should remain Safari’s default search engine due to superior financial terms.He revealed he has “lost sleep over the possibility of losing the revenue share” from the Google agreement. Last year, the companies expanded their partnership to include Google Lens integration in the iPhone’s Visual Intelligence feature, allowing users to analyze images using Google’s AI.The court testimony also shed light on internal negotiations. Before selecting ChatGPT for Apple Intelligence in iOS 18, Apple conducted a “bake-off” with Google. According to Cue, Google had provided a term sheet with conditions “Apple wouldn’t agree to and didn’t agree to with OpenAI.” Meanwhile, Apple’s agreement with Microsoft’s Bing (NASDAQ: MSFT), a non-default option in Safari, was recently amended to operate on a year-to-year basis.Google’s Parent-Company Alphabet Shares Plunge News of Apple’s potential strategic shift had immediate financial consequences. Alphabet shares tumbled as much as 7% on Wednesday, with the stock trading at $152.45, down $12.75 (7.72%) as of 12:11 PM EDT. The decline was significantly higher than the broader market, with trading volume reaching 29.4 million compared to an average of 22.2 million.Apple shares weren’t immune either, slipping as much as 2.5% following Cue’s testimony. The S&P 500 Index briefly turned negative, erasing earlier gains that had topped 0.5%.The market reaction underscores the significance of the Google-Apple search deal to both companies. Google’s year-to-date performance now stands at -19.85%, substantially underperforming the S&P 500’s -4.49%. Despite current volatility, analyst price targets for Alphabet remain optimistic, with an average target of $200.79 compared to the current trading price.Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.The post Apple’s AI Search Plans Revealed in Court, Sends Google Stock Tumbling appeared first on Tokenist.