Apple’s AI Shift Sends Shockwaves Through Google: Market Tumbles $160 Billion After Eddy Cue’s Testimony

Apple’s evolving strategy around search may be about to disrupt one of the most profitable deals in tech history. In a high-stakes antitrust trial, Apple’s Senior Vice President of Services, Eddy Cue, revealed that the iPhone maker is actively exploring new AI-powered search alternatives for its Safari browser — and the markets reacted instantly.

Following Cue’s testimony, shares of Google’s parent company, Alphabet, plummeted by around 8%, erasing a staggering \$160 billion from its market value in a single day. Apple’s own stock wasn’t spared either, dropping 2% after the news. The revelation marks a rare and dramatic turning point in the ongoing Apple-Google partnership, which has long defined the default search experience on iPhones.

Cue’s testimony confirmed that, for the first time in 22 years, Google searches conducted through Safari declined — an unprecedented development. He attributed the dip to growing consumer interest in AI-based search engines, a trend Apple now plans to actively accommodate. Bloomberg and The Verge both report that Apple is evaluating integration with AI search providers like OpenAI and Perplexity AI, a move that directly challenges Google’s dominance in the search ad space.

Though Cue admitted Google remains the preferred default due to revenue-sharing agreements — reportedly worth up to \$20 billion per year — he made it clear that change is on the horizon. “We will add them to the list — they probably won’t be the default,” he said, but noted that even he is losing sleep over the possible fallout of shifting away from Google. The statement underscores the financial and strategic complexity of the Apple-Google deal, which has become a cornerstone of the mobile search landscape.

This shift reflects a broader evolution in search behavior. As users increasingly turn to AI chatbots and LLM-driven search tools, traditional web search engines risk being sidelined. Apple’s potential pivot toward integrating more AI into Safari indicates that it doesn’t want to be left behind — and it might bring the entire industry with it.

What Undercode Say:

Apple’s quiet but deliberate move toward AI-enhanced search represents more than just technological progression — it’s a strategic power play. By subtly threatening to unravel its \$20 billion per year deal with Google, Apple is signaling that the future of search might no longer revolve around traditional keyword queries, but intelligent, conversational, AI-driven interaction.

This pivot mirrors broader market behavior. According to data from Similarweb, traffic to traditional search engines has started to plateau in recent quarters, while AI tools like ChatGPT, Perplexity, and Gemini are seeing sharp upticks in usage. Apple’s possible integration of such platforms into Safari would place these tools directly in front of hundreds of millions of users — most of whom are premium customers.

There’s also a significant advertising angle. If Apple decentralizes search by offering multiple AI-driven options, it weakens Google’s grip on ad targeting through Safari. This threatens Google’s core business model: search-based advertising. With Safari accounting for a large portion of mobile searches in the U.S. and other major markets, the stakes couldn’t be higher.

Cue’s comments suggest internal tension: the desire to innovate versus the risk of cannibalizing one of the most lucrative revenue-sharing arrangements in tech history. Apple is likely trying to hedge — experimenting with AI while retaining Google as the default, at least until one of the AI challengers proves stable and mature enough to take over.

Alphabet’s market crash reflects investor anxiety not just about the immediate revenue hit, but about the fragility of Google’s long-term dominance. If Apple — a company known for tightly controlled, end-to-end user experiences — decides to shift gears, others may follow. Safari is not just a browser; it’s a distribution channel. Whoever controls it, controls the gateway to search for a significant user base.

Meanwhile, OpenAI and Perplexity stand to gain massively. A partnership with Apple could catapult them from niche tools into household names. For OpenAI, already integrated into products like Microsoft’s Bing, this could create a dual-platform advantage — a presence across both Windows and iOS ecosystems.

Ultimately, this isn’t just about search. It’s about who will shape the next generation of information access. Apple has always thrived by placing itself at the crossroads of user experience and hardware-software integration. If it successfully embeds AI into Safari in a seamless way, it could upend the search economy just as it once disrupted music, phones, and computing.

Fact Checker Results:

✅ Alphabet’s share price did fall by about 8% on May 7, wiping out roughly \$160 billion in market cap.
✅ Eddy Cue testified during the ongoing antitrust trial, confirming Apple is exploring other AI-powered search providers.
✅ The Google-Apple deal for default search placement is worth up to \$20 billion per year, according to court testimony.

Prediction:

Expect a gradual rollout of AI-powered search integrations into Safari by late 2025 or early 2026, starting with optional providers like OpenAI and Perplexity. Apple will retain Google as the default until either user engagement with alternatives surges, or legal and financial pressures from antitrust regulators force a more abrupt change. If AI-based search tools continue to mature and capture user trust, the iOS ecosystem could be the first major battleground where Google’s dominance truly begins to crack.