Apple is "actively looking at" reshaping Safari around AI-powered search engines, raising questions about the future of its $20 billion search deal with Google. The news sent Google's stock sharply lower, although the long-term effects for both companies could be more complex.
The issue came to light on Wednesday, when Apple's Senior Vice President of Services, Eddy Cue, testified in the US Department of Justice's antitrust case against Alphabet, as reported by Bloomberg. At the center of the lawsuit is Apple and Google's multibillion-dollar arrangement that keeps Google as the default search engine in Apple's browser.
Cue told the court that Apple is considering a shift, saying, "We will add them to the list — they probably won't be the default," in reference to AI search providers like OpenAI, Perplexity, and Anthropic.
He added, "Prior to AI, my feeling around this was, none of the others were valid choices. I think today there is much greater potential because there are new entrants attacking the problem in a different way."
While these AI providers "still need to improve," Cue said some of their features are "so much better that people will switch."
For the first time, Cue said, searches on Safari dipped last month, which he attributed to people using AI. He believes that AI search providers will eventually replace standard search engines like Google. Apple has already had discussions with Perplexity and is evaluating additional services for future integration into Safari—even if Google remains the default for now.
This steady stream of income is now in question, driven by a larger technological shift. "You may not need an iPhone 10 years from now as crazy as it sounds," Cue said, according to Bloomberg. "AI is a new technology shift, and it's creating new opportunities for new entrants."
AI search chips away at Google's dominance
Apple already offers ChatGPT as an option in Siri and plans to add Google's Gemini later this year. According to Cue, Apple has also looked at Anthropic, Perplexity, Deepseek, and Grok for this role. Its agreement with OpenAI gives Apple the ability to add more AI providers to its operating system, including its own.
Cue said that before ChatGPT was chosen last year as part of Apple Intelligence in iOS 18, there was a "bake-off" with Google. Google's term sheet "had a lot of things Apple wouldn't agree to and didn't agree to with OpenAI."
Despite the excitement around new AI search options, Cue said Google should remain the default in Safari, at least for now, adding that he has "lost sleep over the possibility of losing the revenue share from their agreement." He called the current deal with Google the best financially.
Dropping Google would force Apple to replace about $20 billion a year with revenue from other services—a challenge with no easy solution. The deal is also important for Google, despite its high cost. If the partnership ends, Google would lose some short-term traffic but would stop paying for users likely to choose Google regardless, freeing up resources for other priorities.
For Apple, the real test is whether it can actually capture meaningful market share with alternative search services. If not, Google could remain the default for many iPhone users—without having to pay for the privilege.
Cue's testimony may also be strategic, emphasizing alternatives to Google in order to ease regulatory pressure. Should the Justice Department go easier on Google, the lucrative partnership could survive—even as new technology and public scrutiny shake up the market.
Alphabet shares dropped more than 7 percent on Wednesday, while Apple slipped as much as 2.5 percent—a sign that investors see the potential breakup as a negative for both companies. If AI-driven answer engines take over, the web itself could be on the verge of a fundamental transformation.
