Apple is considering AI-powered search engines for its Safari web browser

The fate of Google’s search business is a hot debate on Wall Street.

Shares of Alphabet Inc. fell more than 7% on Wednesday after testimony from an Apple Inc. executive hinted at potential challenges ahead for the Google parent company. 

Alphabet is already under fire from the government. And during testimony in the U.S. Department of Justice’s search monopoly case against Google on Wednesday, Apple Senior Vice President of Services Eddy Cue testified that Apple is “actively looking at” addingartificial intelligence-powered search enginesto its Safari web browser, according to Bloomberg News. Cue also reportedly said that Safari searches fell for the first time in April, likely because users are turning to AI. 

The shift to AI for search has become a growing concern for Google and other traditional search engines, since chatbots such as OpenAI’s ChatGPT can both search the web and provide conversational responses to users’ queries. Google itself offers similar services with its Gemini chatbot and AI Overviews feature — the latter of which now serves more than 1.5 billion users each month, according to the company.

Alphabet’s stock drop adds to existing concerns on Wall Street that Google’s search business could be headed toward a crisis in an increasingly AI-bent world.

“The market reaction highlights investor jitters over the impact of conversational AI apps on Google’s traditional search business, which is the company’s financial workhorse,” Baird Equity Research analysts said in a note Wednesday. 

Still, they deemed the stock move a “knee-jerk reaction” to the testimony. Despite offering competitive search products, AI companies “are still at a fraction of the scale of Google search volumes, and lack the infrastructure, advertising technology, data analytics and other tools necessary to compete effectively in search,” the Baird analysts said, adding that “it could be years before competitors match Google’s capabilities in the advertising market.”

Apple’s Cue seemed to acknowledge that as well in his testimony, saying that while Apple is also considering AI search products from Perplexity, Anthropic, DeepSeek and Grok, AI search needs to improve.

He thinks AI companies are on their way, however, with functions that are “so much better that people will switch.”

“There’s enough money now, enough large players, that I don’t see how it doesn’t happen,” Cue reportedly said about the shift to AI-powered search.

Apple already hosts OpenAI’s ChatGPT in its virtual assistant, Siri, and is expected to add support for Google’s AI chatbot, Gemini, by the end of the year. Cue noted that Apple could add others to the list, though they probably wouldn’t have default placement. 

Google’s fate in the ChatGPT era has been a controversial topic. In a March note, Melius Research analyst Ben Reitzes compared Google to film-camera pioneer Kodak, which ultimately gave way to the rise of digital cameras.

“Metaphorically speaking, OpenAI’s home page is arguably this generation’s ‘digital camera,’” Reitzes said. “The loyal ad buyers for Google ads are arguably the loyal ‘photofinishers’ who may prove to be fickle if the ads see diminishing returns.”

Reitzes has been worried that Google “is losing the next generation of ‘searchers’ to ChatGPT,” he said in March.

As the search market continues to change, Google will have to “navigate a delicate balance between protecting monetization and fostering innovation,” the Baird analysts said, adding that “there will be ‘ups and downs.’”

The Justice Department’s lawsuit against Alphabet is focused on the multibillion-dollar annual agreement between Google and Apple for the search giant to be the default on the Safari web browser. Cue reportedly said during his testimony that he supports Google as Safari’s default search engine, and that the $20 billion agreement is still the company’s best option financially.

But if the government takes issue with the search relationship between Apple and Google, the Baird analysts noted that Alphabet might even end up in a slightly better financial position since it wouldn’t have to shell out roughly $20 billion to Apple each year for search placement.