Is Apple breaking up with Google?

For many people, Google is the Internet. That has been especially true on Apple products like the iPhone and iPad, where an arrangement between the two companies has made Google the default search engine in the Safari browser. But artificial intelligence could change that soon.

AI's threat to Google "just got real," said The Wall Street Journal. Google searches on Safari have fallen in recent months as users turn instead to ChatGPT and Perplexity, said Eddy Cue, Apple's senior vice president of services last week. That decline in search usage has "not happened in over 20 years," Cue said. His statements "thicken the cloud of uncertainty" hanging over Google, said the Journal.

Google pays Apple $20 billion a year to be the default search engine on Safari, said USA Today, making the relationship important to the bottom line of both companies. Apple, though, may be ready to move to where users are going and is "actively looking" at incorporating AI search into Safari, said Cue. The company is "hedging its bets on AI partners," said Wedbush Securities analyst Dan Ives.

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What did the commentators say?

"Is Apple finally breaking up with Google?" asked Parmy Olson at Bloomberg. Google execs have been "racing to stave off a decline" in its search business ever since ChatGPT "exploded onto the scene" in 2022. There was hope: Some studies had suggested that many internet users turned to AI as a "complement to classic search, not a full replacement." That may be changing, which raises the question of how quickly "Google's money-printing search machine" will decline.

Cue may have an "incentive to portray Google as a wounded animal," said Peter Kafka at Business Insider. A federal judge ruled last year that Google has an "illegal monopoly in search" and may order the company's payments to Apple to stop. It is in Apple's interest not to "lose all of that high-margin revenue." Playing up the AI competition would undermine the judgment that Google has a monopoly and could "allow those payments to keep flowing."

Google's parent company, Alphabet, is "not in immediate danger," said Jeremy Kahn at Fortune. It is still "far and away the dominant player in search," and it still has other sources of revenue like YouTube and its cloud-based storage and computing business. Cue's comments, though, are a sign the "clock is ticking."

What next?

Cue's comments briefly sparked a selloff of Alphabet stock but investors "shouldn't panic," said Quartz. Analysts at Jeffries said that while the Safari browser accounts for 17% of the market, Google's Chrome "commands 66%" of browser-based internet activity. That gives Alphabet a "much larger footprint regardless of what Apple does."

Google is also betting on the future of AI, said TechCrunch. The company is testing a feature that puts an "AI Mode" button directly beneath its search bar, replacing the "I'm Feeling Lucky" button. Google "rarely makes changes to its search homepage," but the rise of AI means it "may now feel pressure to do so."