Google (GOOGL) Stock: Search Giant Refutes Apple's Claims About AI Impact on Search Volumes

TLDR:

Table of Contents

Google denies AI is reducing search volumes, contradicting Apple’s testimony in DOJ lawsuit
Apple executive claimed Safari searches fell for first time due to AI usage
Alphabet stock dropped 7.3% after Apple’s testimony but recovered 2.1% in premarket trading
Apple reportedly discussing AI search options with Perplexity AI, Anthropic, and OpenAI
These developments could threaten Google’s estimated $20 billion yearly payment to be Safari’s default search engine

Google parent Alphabet is fighting back against claims that artificial intelligence is hurting its core search business. This comes after an Apple executive’s testimony in an ongoing Department of Justice lawsuit sent Alphabet’s stock tumbling.

Alphabet shares fell 7.3% on Wednesday after Eddy Cue, Apple’s senior vice president of services, testified that searches on Apple’s Safari browser decreased last month for the first time. Cue blamed this drop on rising AI use, according to Bloomberg.

The stock partially recovered Thursday morning, climbing 2.1% in premarket trading after Google posted a response.

“We continue to see overall query growth in Search. That includes an increase in total queries coming from Apple’s devices and platforms,” Google stated in a blog post published Wednesday.

The search giant mentioned that voice and visual searches were contributing to its growth, though neither company clarified exactly how they measure search volumes.

Google stock down over 10% today as Apple hints at integrating AI search into Safari 📉
Google pays Apple $20B per year to remain Safari's default search option 💰#GOOG #AAPL pic.twitter.com/51Lr7T880s
— Trader Edge (@Pro_Trader_Edge) May 7, 2025

Apple Exploring AI Search Alternatives

Apple is reportedly looking beyond traditional search. Cue testified that the iPhone maker has held discussions with Perplexity AI about adding AI-powered search options to Safari.

The Apple executive suggested these AI search tools could eventually replace standard search engines like Google’s. Bloomberg reported that Apple has also talked with Anthropic and ChatGPT creator OpenAI.

Such a shift raises questions about the lucrative partnership between Apple and Google. Google reportedly pays around $20 billion annually to remain the default search engine on Safari.

Financial Stakes Are High

This arrangement benefits both companies. Google maintains its dominant market position, while Apple receives a portion of Google’s ad revenue generated through Safari searches.

Cue acknowledged the potential financial impact, saying he’s “lost a lot of sleep thinking about” how these changes could affect Apple’s revenue.

Apple shares were down about 2% in recent trading, reflecting investor concerns about this revenue stream.

The timing is particularly sensitive as the testimony comes during the Department of Justice’s antitrust case against Google, which is examining the company’s search dominance.

Apple didn’t immediately respond to requests for comment early Thursday.

News Corp, which owns Barron’s publisher Dow Jones, has its own stake in the AI landscape. The company has sued Perplexity AI alleging copyright infringement.

At the same time, News Corp signed a multi-year partnership with OpenAI in March 2024, showing the complex relationships forming in the AI and content spaces.

Google’s search business remains its primary revenue driver, making any threat to search volume a serious concern for investors.

The dispute highlights growing tensions as AI reshapes the search landscape. Traditional search engines face new competition from AI-powered alternatives that provide direct answers rather than lists of links.

For now, Google maintains that its search business continues to grow overall, including on Apple devices.

Stay Ahead of the Market with Benzinga Pro!

Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders: