Apple's Safari Shift: AI Search Partners Could End $20B Google Deal

Apple’s AI Search Ambitions Signal Potential End to Google Partnership Era

In a significant development that could reshape the digital landscape, Apple Inc. is “actively looking at” transforming its Safari web browser to prioritize AI-powered search engines, potentially ending a long-standing relationship with Google that has defined how millions access information online.

Eddy Cue, Apple’s senior vice president of services, revealed this strategic shift during testimony in the U.S. Justice Department’s antitrust lawsuit against Alphabet Inc. The case centers on the estimated $20 billion annual agreement that establishes Google as the default search engine on Apple devices—an arrangement that could be forcibly dissolved if the government prevails.

“I believe that AI search providers, including OpenAI, Perplexity AI Inc. and Anthropic PBC, will eventually replace standard search engines like Alphabet’s Google,” Cue testified, indicating Apple’s intention to integrate these options into Safari in the future.

The revelation comes at a pivotal moment when consumer search habits appear to be evolving. Cue noted that Safari searches declined for the first time last month, a trend he attributes to increasing AI usage. This shift suggests the potential for a fundamental transformation in how users seek information online.

Michael Nathanson, co-founder of MoffettNathanson, speaking on Bloomberg Radio’s Surveillance program, characterized this development as possibly marking “the beginning of the end for the dominance of Google’s search engine.” He explained the emerging paradigm: “The next five years we all will search differently… more and more mainstream people will use chatbots to get single answer queries.”

This transition represents a significant departure from traditional search methodologies. “The idea of going to links and finding the answers as you travel the web will be old school,” Nathanson continued. “New school is going to be ‘here’s your answer.'”

Google isn’t standing still amid these challenges. The company has introduced “AI overviews” that provide concise answers above traditional search links. According to Nathanson, Google maintains that users still click through from these overviews to destination sites, preserving their core business model.

The financial implications for both tech giants are substantial. Nathanson revealed that his firm has assigned a “sell” rating to Apple stock “in part because we think when you read Judge Meta’s decision and where they’re going in this case, it looks like Apple will not be able to get the $20 billion of TAC [traffic acquisition costs] they’re getting now from Google.”

For Alphabet, the situation creates unprecedented uncertainty. “The market is big time wrestling about how disruptive AI will be to these companies that have been bulletproof for most of my career,” Nathanson observed. “Finally, there’s a question mark about sustainability and investment levels.”

As this technological and legal drama unfolds, the outcome could fundamentally alter how consumers interact with digital information, potentially ending an era defined by Google’s search dominance and ushering in a new AI-driven paradigm for information discovery.

*Sources: Bloomberg Surveillance Podcast, U.S. Justice Department court proceedings