Apple’s Safari revamp could halt Google’s dominance

Apple’s plan to revamp its Safari web browser by adding AI-powered search options is a big blow to Google, whose shares tumbled as the move could strike at the heart of its lucrative search advertising business.

Eddy Cue, the tech giant’s senior vice-president of services, offered testimony at an antitrust case against Alphabet on Wednesday, saying the iPhone maker was “actively looking at” reshaping Safari, a source familiar with the matter said.

Cue also said Apple would add AI search providers, including OpenAI and Perplexity AI, as search options in the future, Bloomberg reported.

The news pushed Alphabet shares down 7.6%, wiping off more than $150bn from its market value. Apple stock also fell after Cue said searches on Safari fell for the first time last month due to users increasingly turning to AI.

The commentary suggests a seismic shift in search is around the corner, not years away, threatening Google’s once impenetrable moat in the search business.

Google is not defenceless though. It has introduced an “AI mode” on its search page to retain its millions of users from moving to other AI models.

The company hopes to enter an agreement with Apple by the middle of this year to include its Gemini AI technology on new phones, CEO Sundar Pichai said in a testimony at an antitrust trial last month.

Google is the default search engine on Apple’s browser, a coveted position for which it pays Apple about $20bn a year, or about 36% of its search advertising revenue generated through the Safari browser, analysts have estimated.

“The loss of exclusivity at Apple should have very severe consequences for Google even if there are no further measures,” said Gil Luria, an analyst at DA Davidson.

“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 ... many advertisers could move much of their ad budgets away from Google,” Luria said.

Reuters