Google stock falls as Apple signals interest in AI search rivals like Perplexity

Apple eyes AI search engines, pressuring Google’s market grip

Shares of Google-parent Alphabet dropped more than 6 per cent on Wednesday, May 7 following explosive testimony from Apple (AAPL) executive Eddy Cue, who said the company is evaluating AI search engines such as Perplexity for integration into Safari. The comment came during the US government’s antitrust trial against Google, which accuses the tech giant of maintaining a monopoly in online search.

Cue disclosed that for the first time, Safari experienced a drop in search usage last month, as users increasingly explore AI-based alternatives. While he clarified that Apple won’t immediately replace Google due to the $20 billion annual deal it earns from the partnership, Cue predicted that AI search apps would eventually supplant traditional search engines.

Also read: 'Don't break Google': Perplexity AI CEO offers alternative ahead of antitrust testimony

Google faces growing AI search competition from Apple and Microsoft

The shift signals a broader threat to Google Search as Apple’s tech ecosystem gradually leans into AI integration. Through its Apple Intelligence platform, Apple already offers ChatGPT as a search tool.

Meanwhile, Google is racing to stay ahead by rolling out AI Overviews and testing a ChatGPT-style AI Mode within its core Google Search.

Though Google’s Gemini search exists as a standalone AI product, it hasn’t replaced the default experience. Microsoft’s Copilot Search and OpenAI’s expanding reach with Perplexity AI only add to the mounting pressure on Google to protect its dominant position.

Apple’s deal is just one of many Google holds with device makers, including Samsung, to maintain its grip on search traffic worldwide.

However, Apple’s reliance on this deal—contributing to its $96.1 billion Services revenue in 2024—makes the company both a partner and a potential disruptor in the AI search engine race.