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Shares in Google’s parent Alphabet fell by as much as 9 per cent on Wednesday after a top Apple executive said the iPhone maker was “looking at” introducing alternative search engines for its web browser powered by artificial intelligence.
Eddy Cue, Apple’s senior vice-president of services, told a US court that the company was talking to AI start-ups such as Perplexity about offering their search tools as an alternative to Google.
Cue said that Apple planned to “add them to the list” of tools that iPhone and iPad owners can choose to set as their preferred option to search the web through its Safari browser, without giving a timeframe for the potential move.
Apple was also considering adding AI services from China’s DeepSeek to the iPhone, he said, among other options.
A shift to new search providers would threaten Alphabet’s multibillion-dollar relationship with Apple, under which Google is the default search engine for iPhones and the Safari browsers. The deal brings Google hundreds of millions of users and boosts its advertising business.
Shares in Alphabet were down nearly 8 per cent in early-afternoon trading in New York, while Apple fell by almost 2 per cent. The share price falls came after Bloomberg earlier reported Cue’s comments.
Cue was testifying as part of a hearing to determine antitrust remedies after the US Department of Justice’s legal victory against Google last year. A federal judge ruled last August that Google maintained an illegal monopoly in search through deals with wireless carriers, browser developers and device manufacturers.
Apple stands to take a multibillion-dollar hit to its profits if its deal with Google is unwound as a result of the ruling.
Google pays as much as $20bn a year to Apple to be its default search engine. The long-standing deal between the two Silicon Valley companies was central to the US government’s case.
Apple has introduced several new generative AI tools to the iPhone over the past year, including access to OpenAI’s ChatGPT through its Siri assistant. However, other features, including a broader upgrade to Siri, have been delayed, fuelling fears among some investors that Apple is falling behind rivals such as Google, Amazon and Microsoft in the generative AI race.
AI tools offer users complete written answers to search queries, backed up by supporting links, rather than Google’s traditional list of web pages. Google has also upgraded its search engine to incorporate results using generative AI.
In Wednesday’s testimony, Cue said that AI had opened the door to serious competition to Google in search for the first time and that Apple had discussed adding various AI features to the iPhone from a range of new providers, including Perplexity, Anthropic, China’s DeepSeek and Elon Musk’s xAI.
