Apple Eyes AI Search Alternatives, Wiping $150 Billion Off Google’s Market Value

As the AI race intensifies, a subtle shift by Apple has triggered seismic consequences in the digital ad and search landscape. With a reported plan to integrate AI-based alternatives into its Safari browser, Apple may be preparing to upend its longstanding relationship with Google—a relationship worth an estimated \$20 billion annually. In doing so, it has already dealt a historic financial blow to Google-parent Alphabet, shaving off over \$150 billion in market value in a single day.

This potential pivot comes as part of a broader rethinking by Apple on how users search the web. Eddy Cue, Apple’s Senior Vice President of Services, suggested in a U.S. antitrust trial that Safari searches dropped for the first time last month, as iPhone users began exploring AI-powered tools. That single comment, paired with reports of Apple evaluating partnerships with OpenAI and Perplexity AI, has left the market questioning whether Google’s dominance in search is finally at risk.

The Search Shake-Up: What’s Happening

Apple is exploring AI search tools for Safari, possibly ending or diluting its exclusive deal with Google.
Alphabet’s shares dropped 7.3% on the news, cutting \$150 billion from its market capitalization.
Safari search volume reportedly declined last month—a first—due to rising AI tool usage.
Google pays Apple about \$20 billion a year to be Safari’s default search engine.
This arrangement accounts for an estimated 36% of Google’s mobile search ad revenue.
Apple may soon offer OpenAI’s ChatGPT and Perplexity AI as alternative search providers.
Google defended its position, claiming search queries from Apple devices are still growing.
The Justice Department is pushing to restrict Google’s ability to strike default placement deals.
Analyst Gil Luria warns losing exclusivity with Apple could have “severe consequences” for Google.
Advertisers may reduce spending on Google if competitive search options gain traction.
Google is also bolstering its AI credentials with Gemini, AI Overviews, and voice/visual search.
CEO Sundar Pichai hinted at a possible new AI deal with Apple, using Gemini on iPhones.
ChatGPT has surpassed 1 billion weekly searches and sees over 400 million weekly active users.
Apple’s move reflects the broader shift toward generative search and AI-driven experiences.
This could challenge Google’s 90%+ search market share if adoption of alternatives accelerates.
The story underscores just how much is at stake in the battle for search engine relevance in the AI era.

What Undercode Say:

Apple’s signal to pivot away from Google search isn’t just a product strategy—it’s a tectonic movement in the digital economy. At the core lies a decades-old partnership built on massive sums of money and near-monopoly influence. But if iPhone users, who represent a significant chunk of global search traffic, begin to favor AI-enhanced search tools like ChatGPT or Perplexity, the advertising equation shifts dramatically.

Google has for years been the gateway to the internet, bolstered by tight integration into Apple’s ecosystem. The \$20 billion it spends annually isn’t just to maintain visibility—it’s to suppress competition. Apple’s decision to explore other search experiences fractures that moat. And in a climate where trust, data privacy, and user experience are central, Apple positioning itself as neutral and AI-forward plays well with its audience.

There’s also timing. With U.S. antitrust authorities circling Google’s practices, Apple’s move could be seen as proactive positioning—a strategic distancing. If regulators succeed in banning exclusivity deals like the one Google holds with Apple, Cupertino can argue it had already started exploring competitive alternatives.

The financial markets clearly understand the risk. A 7.3% drop in Alphabet’s value in a single day is one of the most significant tech market reactions in recent memory—comparable to pandemic-level shocks or earnings disasters. It’s also an indictment of how much Google relies on Apple users.

Moreover, the AI boom gives Apple cover. By aligning with rising AI stars like OpenAI and Perplexity, Apple taps into market momentum and reduces dependency on a company it has no direct control over. These startups offer not just innovation, but agility—something Google has sometimes lacked due to its size and regulatory baggage.

However, Google isn’t retreating. Its push into AI-powered search is serious and accelerating. Gemini, its generative AI engine, and AI Overviews are meant to transform how users experience Google Search. And while Alphabet’s scale allows it to experiment rapidly, the brand’s challenge is trust and user fatigue. Google needs to evolve faster than Apple can integrate better alternatives.

The broader takeaway? The search business is no longer a monopoly governed by browser defaults. It’s becoming a fluid ecosystem driven by real innovation and shifting user habits. If AI platforms start delivering faster, more intelligent, and more contextual results, they will erode Google’s dominance—bit by bit, search by search.

In the long term, Google faces a deeper question: Is it still the default choice because it’s the best—or simply because it’s embedded?

Fact Checker Results:

✅ Alphabet did lose approximately \$150B in market value following the Apple news.
✅ Eddy Cue testified that Safari searches declined, citing AI usage as a factor.
✅ Apple is considering OpenAI and Perplexity AI as search partners, per Bloomberg.

Prediction:

If Apple proceeds with integrating AI search engines like ChatGPT and Perplexity into Safari by default—or even offers a selection menu—Google’s grip on mobile search will weaken significantly. Expect market shifts in Q3 2025, with a decline in Google’s mobile search ad revenue, increased competition in AI search adoption, and intensified regulatory pressure. The biggest change may not be technical—it will be the psychological break from the default. Once users try AI-driven search and find it more effective, loyalty to Google could erode at an accelerated pace.