Shares of Alphabet, Google's parent company, fell sharply—by as much as 9%—on Wednesday after a senior Apple executive revealed the company’s plans to introduce alternative AI-powered search engines within its Safari browser. During a U. S. court hearing, Eddy Cue, Apple’s senior vice-president of services, disclosed that Apple is actively seeking partnerships with AI startups to enhance the user experience through new AI-enabled search features. Cue elaborated on Apple’s strategic plan to expand the search engine options available to iPhone users, indicating that the company not only is considering but intends to "add them to the list" of search tools accessible on iOS. This initiative aligns with Apple’s broader goal to integrate AI services directly into its ecosystem, offering innovative and seamless ways for users to access information. The potential rollout of AI-powered search engines on Apple devices represents a major shift away from Google’s long-standing status as the default search provider on Apple platforms. This change could reshape the competitive landscape of the digital search market, which traditionally has seen Google as the main recipient of search-driven advertising revenue. Following the news, Alphabet’s shares dropped nearly 9% during early-afternoon trading, reflecting investor concerns about the company’s prospective market share in mobile search. This decline highlights the possible financial effects of Apple’s diversified search engine approach and its focus on AI technologies. Cue’s testimony occurred amid ongoing legal proceedings scrutinizing Apple’s business practices, including its agreements regarding search engine defaults and revenue-sharing.

Apple reportedly receives significant payments from Google—estimated at up to $20 billion annually—to keep Google as the primary search engine on Apple devices. This arrangement represents a major revenue source for Apple but may be reconsidered given the new AI-driven search engine plans. Alongside these legal challenges, Apple has been investing significantly in generative AI tools. The company recently launched several AI-driven services designed to provide users with detailed written responses and enhanced search capabilities, using advancements in natural language processing and machine learning. These offerings aim to compete with those from other tech giants and AI startups. Cue’s testimony underscored Apple’s commitment to integrating AI tools capable of delivering complete and contextually relevant answers, moving beyond traditional keyword-based search. This strategy seeks to boost user engagement by fostering more intuitive, conversational interactions with technology. Apple’s move toward alternative AI-powered search functions reflects wider technological trends where artificial intelligence is revolutionizing how users find and interact with information. The company’s initiatives could drive substantial changes in digital advertising, competition among search providers, and the mobile user experience worldwide. In summary, Apple’s announcement, as revealed by Eddy Cue, marks a transformative shift in the search engine market, potentially challenging Alphabet’s dominance and shaping the future of AI-powered digital services. Investors and industry observers will be closely watching how these developments evolve and their broader impact on the technology ecosystem.