Google has been the default and search engine option available on Safari, since 2022 when both companies signed a lucrative deal that saw Google pay Apple $20 billion. That fee was equivalent to 36% of the search advertising revenue Google made from search advertising on Safari that year, according to Morgan Stanley analysts.
Both companies agree that the deal benefits them both. However, when Eddy Cue, the senior vice president of Apple’s services unit testified as part of the federal government’s ongoing antitrust case against Google that Apple is strongly considering the addition of AI-powered search options to Safari, Alphabet’s stock tanked more than 7%, costing it $160 billion in market share, while Apple shares were down 1.1% at market close.
Eddy Cue’s testimony hints at a change in search on Apple devices
According to Eddy Cue, there’s a big chance Apple adds generative AI search options from the likes of OpenAI or Perplexity AI as search options in Safari, though he stated he believes Google should remain the default option.
That is a huge change for Apple considering the iconic company’s users have always navigated the web through Google searches since Apple’s original smartphone launched in 2007.
The looming shift could mean consumers will now be exposed to a universe dominated by AI products from multiple companies. Investors are apprehensive about such huge change hence the slide in shares.
As things stand, Apple offers OpenAI’s ChatGPT as an option in the Siri digital assistant thanks to an agreement that allows it to add other AI providers to the company’s operating system, including Apple’s own. The iconic company is expected to add Gemini, later this year.
Cue believes that this is the right time for Apple to make these moves because of how rapidly technology is evolving.
“You may not need an iPhone 10 years from now as crazy as it sounds,” Cue said. “AI is a new technology shift, and it’s creating new opportunities for new entrants.”
Cue also said that improving will require the AI players to enhance their search indexes. But, even if that doesn’t happen quickly, they have other features he says are “so much better” people will want to switch.
“There’s enough money now, enough large players, that I don’t see how it doesn’t happen,” he said, referring to the evolution from standard search to AI.
Aside from the capital and large players involved, Cue is well aware that large language models — the underlying technology for generative AI — will only continue to improve, which will give users more reason to change their habits.
Google to remain default search engine in Safari despite the revelation
Cue is in charge of offerings like iCloud, TV+ and Apple Music, but he’s also famous as the company’s chief deal maker.
As a result, he is hard pressed to avoid any major losses and the search partnership with Google being broken up would reflect terribly on the financial results for his division, which generated a record $26.6 billion during the March period.
Cue is well aware of how lucrative Apple’s deal with Google is and believes the search engine should remain the default in Safari, even admitting that he has lost sleep over the possibility of losing the revenue sharing from their agreement.
As far as he is concerned, Apple’s deal with Google for regular search still has the most favorable financial terms.
Last year, both companies expanded their deal to include Google Lens integration as part of the Visual Intelligence feature on the latest iPhones. The update allows a user to take a picture and use Google AI to analyze it.
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