Apple AI search alternatives: Threatens Google's $20 Billion Deal

Apple is “actively looking at” reshaping Safari around AI-powered search engines, a move that sent Google’s parent company Alphabet’s shares tumbling 7.3% on Wednesday, wiping approximately $150 billion from its market value. This potential shift in how users find information online could disrupt Google’s long-standing dominance in the search market and the lucrative $20 billion annual deal that makes Google the default search engine on Apple devices.

During testimony in the U.S. Department of Justice’s antitrust case against Google, Apple’s Senior Vice President of Services, Eddy Cue, revealed that searches in Safari fell for the first time last month something that “has never happened in 22 years.” This unprecedented decline signals a fundamental shift in user behavior, with more people turning to AI-powered alternatives for information.

“We will add them to the list they probably won’t be the default,” Cue said, referring to AI search providers like Perplexity, OpenAI, and Anthropic. While these services “still need to improve,” Cue acknowledged that some of their features are “so much better that people will switch.”

The $20 Billion Question: What’s at Stake?

The current arrangement between Apple and Google is estimated to be worth around $20 billion annually approximately 36% of Google’s search advertising revenue generated through Safari. This deal, which makes Google the default search engine across Apple’s ecosystem, is now under intense scrutiny from regulators who see it as anti-competitive.

“I’ve lost a lot of sleep thinking about” the possibility of losing this revenue, Cue admitted during his testimony. For Apple, finding alternative revenue streams to replace this massive income would be challenging. For Google, losing exclusive access to Apple’s user base could severely impact its advertising business, which relies heavily on iPhone customers.

The Justice Department has proposed banning Google from paying companies to be the default search engine as one remedy to break up its dominance in online search. This regulatory pressure adds another layer of urgency to Apple’s exploration of AI alternatives.

AI Search: The New Frontier

What makes AI search different from traditional search engines? Instead of returning a list of links, AI-powered search tools like ChatGPT, Claude, and Perplexity provide direct, conversational answers synthesized from multiple sources.

“Prior to AI, my feeling around this was, none of the others were valid choices,” Cue explained. “I think today there is much greater potential because there are new entrants attacking the problem in a different way.”

Apple has already integrated ChatGPT into Siri as part of its Apple Intelligence features, and Google CEO Sundar Pichai confirmed last week that the companies are nearing a deal to bring Gemini to the iPhone. But Cue’s testimony suggests Apple is looking beyond these partnerships to fundamentally change how search works in Safari.

The Future of Search: A Technological Shift

Cue’s vision for the future of search and technology more broadly is surprisingly radical. “You may not need an iPhone 10 years from now as crazy as it sounds,” he said. “The only way you truly have true competition is when you have technology shifts. Technology shifts create these opportunities. AI is a new technology shift, and it’s creating new opportunities for new entrants.”

This perspective aligns with the rapid growth of AI search tools. ChatGPT reported over 1 billion weekly web searches for its search feature as of April, with more than 400 million weekly active users as of February.

Google’s Response: Not Backing Down

Apple AI search alternatives: Google not backing down

Google isn’t standing still amid these challenges. The company stated that it continues to see growth in overall search queries, including “total queries coming from Apple’s devices and platforms.”

“People are seeing that Google Search is more useful for more of their queries and they’re accessing it for new things and in new ways,” the company wrote in a blog post, citing voice and visual search features as contributors to total search volume growth.

Google has also introduced an “AI mode” on its search page and expanded AI Overviews summaries that appear above traditional hyperlinks to users in more than 100 countries. The company has even added advertisements to this feature, boosting Search ad sales.

What This Means for Users

For everyday users, this shift could transform how we find information online. Instead of scrolling through pages of links, AI search tools aim to provide direct answers to questions, synthesizing information from multiple sources.

However, these tools aren’t perfect. Cue noted that AI search providers need to improve their search indexes to compete with Google on general queries. But even if this doesn’t happen quickly, users may still switch rapidly because of other compelling features.

The Road Ahead: Competition and Innovation

The potential breakup of Google’s search dominance could spark a new era of competition and innovation in how we access information online. “There’s enough money now, enough large players, that I don’t see how it doesn’t happen,” Cue said, referring to the continued improvement of large language models.

For Apple, adding AI search options to Safari represents both a hedge against regulatory action and an acknowledgment of changing user preferences. For Google, it’s a wake-up call that even its most lucrative partnerships aren’t immune to technological disruption.

As this story continues to unfold, one thing is clear: the way we search for information online is undergoing its most significant transformation since Google first emerged as the dominant player more than two decades ago.

What’s Next for Apple and Google?

Apple’s exploration of AI search alternatives doesn’t mean it’s abandoning Google entirely. Cue said he believes Google should remain the default search option in Safari, at least for now. The company has also had discussions with Perplexity and is evaluating additional services for future integration.

Meanwhile, Google hopes to enter an agreement with Apple by mid-2025 to include its Gemini AI technology on new iPhones, according to CEO Sundar Pichai’s testimony last month.

As these tech giants navigate this rapidly evolving landscape, users can expect to see more AI-powered features appearing in their browsers and devices. Whether these changes will truly democratize online search or simply shift power from one tech giant to another remains to be seen.

What’s certain is that the search revolution is underway, and its implications extend far beyond stock prices and corporate partnerships it could fundamentally change how we interact with the digital world.

The Broader Impact on the Web Ecosystem

The shift toward AI-powered search doesn’t just affect Apple and Google it has profound implications for the entire web ecosystem. Traditional search engines drive traffic to websites through links, supporting the ad-based business model that funds much of the internet’s content. AI search tools, by contrast, often extract and synthesize information directly, potentially reducing clicks to source websites.

This has sparked concerns among content creators and publishers who worry about losing traffic and revenue. Some major websites have already begun blocking AI crawlers from accessing their content, creating a potential fragmentation in what information is available through different search methods.

“The loss of exclusivity at Apple should have very severe consequences for Google even if there are no further measures,” D.A. Davidson analyst Gil Luria told Reuters. “Many advertisers have all of their search advertising with Google because it is practically a monopoly with almost 90% share. If there were other viable alternatives for search, many advertisers could move much of their ad budgets away from Google.”

User Privacy: A New Battleground

Privacy could become a key differentiator in this new search landscape. Apple has positioned itself as a champion of user privacy in recent years, implementing features like App Tracking Transparency that have disrupted the digital advertising industry.

AI search tools present both opportunities and challenges for privacy. On one hand, they could reduce the need for extensive data collection and targeted advertising that characterizes the current search ecosystem. On the other hand, they require access to vast amounts of user queries and interactions to improve their capabilities.

How Apple balances these considerations as it explores AI search alternatives will be crucial to maintaining its privacy-focused brand identity while delivering the convenience users expect.

The Technical Challenges Ahead

Despite the excitement surrounding AI search, significant technical hurdles remain. Current AI models can sometimes generate incorrect information or “hallucinate” facts, making them less reliable than traditional search engines for certain types of queries.

They also struggle with recency the ability to provide up-to-date information about breaking news or rapidly changing situations. Traditional search engines continuously crawl the web, indexing new content as it appears, while many AI models are trained on data with specific cutoff dates.

Addressing these limitations will be essential for AI search tools to truly compete with Google across the full spectrum of search use cases. This is likely why Cue emphasized that these services “still need to improve” before they can fully replace traditional search engines.

The Regulatory Dimension

The timing of Apple’s exploration of AI search alternatives coincides with increased regulatory scrutiny of big tech companies. The U.S. Department of Justice’s antitrust case against Google specifically targets the search giant’s deals with companies like Apple to maintain its dominant position.

By publicly discussing alternatives to Google, Apple may be positioning itself favorably in the eyes of regulators, demonstrating that it’s not dependent on its partnership with Google and is actively exploring competition in the search market.

However, this strategy could backfire if regulators begin to view Apple’s growing influence in AI as creating new competition concerns. The company’s control over what search options are available on its devices gives it significant power to shape the future of online information access.

The Consumer Experience: What Changes?

For the average iPhone, iPad, or Mac user, what might this shift toward AI search look like in practice? Initially, it could appear as new options in Safari’s search engine settings, alongside current choices like Google, Bing, Yahoo, and DuckDuckGo.

Users might also see more integrated AI features within Safari itself perhaps a split interface that offers both traditional search results and AI-generated answers, or contextual AI assistance that appears when needed without replacing the familiar search experience entirely.

Apple’s approach to integrating AI search will likely prioritize simplicity and intuitiveness, hallmarks of the company’s design philosophy. Rather than forcing users to choose between traditional and AI search, Apple may create a hybrid experience that leverages the strengths of both approaches.

The Economic Ripple Effects

The potential disruption to Google’s search business has implications far beyond the tech industry. Google’s parent company Alphabet derives approximately 80% of its revenue from advertising, with search ads being the largest component. Any significant reduction in Google’s search market share could impact its ability to fund other initiatives, from self-driving cars to health research.

For Apple, finding new revenue streams to replace the Google deal could accelerate its push into services. The company has already been diversifying beyond hardware sales with offerings like Apple TV+, Apple Music, and Apple Arcade. AI-powered services could become another pillar of this strategy.

The advertising industry, too, would need to adapt to a world where AI search plays a larger role. The current digital advertising ecosystem is built around keywords, targeting, and measurable clicks all of which could function differently in an AI-centric search environment.

Conclusion: A Pivotal Moment for the Internet

The exploration of AI search alternatives by Apple represents more than just a business decision it’s a potential inflection point in how humans interact with information online. Since the early days of the web, search engines have served as our primary gateway to digital knowledge. A fundamental shift in this technology could reshape our relationship with information itself.

As Eddy Cue noted, “The only way you truly have true competition is when you have technology shifts.” We may be witnessing exactly such a shift one that could ultimately prove as transformative as the move from desktop to mobile computing.

Whether Google maintains its dominance by successfully adapting to the AI era, or new players emerge to claim significant market share, the search landscape of the future will likely look very different from what we’ve known for the past two decades. And Apple, with its control over one of the world’s most popular browsers, will play a crucial role in determining how that future unfolds.

For users, the ultimate measure of success will be whether these new AI-powered tools actually deliver on their promise: making it faster, easier, and more intuitive to find the information we need in an increasingly complex digital world.