Google's (GOOG, GOOGL) stock experienced a significant decline of over 8% after Apple (AAPL, Financial) indicated it is considering integrating AI-based search engines like Perplexity into its Safari browser. This revelation came during Alphabet's antitrust trial, where it was disclosed that Google pays Apple $20 billion annually to keep its search engine as the default option in Safari. Eddy Cue, Apple's Senior VP for Services, highlighted a recent decline in Safari search volumes, attributing it to the growing preference for AI-driven search options among users. While Apple currently offers ChatGPT as a search option, Cue suggested that AI search applications might eventually replace traditional search engines.
In response to the competitive AI landscape, Google has introduced AI features in its standard search, including generative AI responses, and is testing AI models similar to ChatGPT and Perplexity. Google also offers a separate AI search option called Gemini. The exclusive agreement between Google and Apple is one of many that Google has secured to maintain its search engine's prominence globally, including partnerships with companies like Samsung.
Apple's service business, which generated $96.1 billion in sales in 2024, significantly benefits from its agreement with Google, contributing $20 billion annually.
