Apple weighs AI search in Safari, threatening Google's $20B deal

Apple knows its $20 billion gravy train with Google won't roll on forever.

During testimony in the US Department of Justice antitrust trial against Alphabet, Apple SVP of Services Eddy Cue revealed that Apple is "actively looking at" overhauling Safari around AI search. The company is already in talks with Perplexity and considering adding providers like OpenAI and Anthropic to its browser search menu.

Safari searches drop for the first time

It's not just antitrust regulators forcing Apple's hand; user habits are already shifting fast.

Cue disclosed a telling metric in court: for the very first time, search queries on Safari dipped in April. Cue directly attributed that decline to people turning to AI engines instead of standard web searches.

According to Cue, AI search engines will eventually replace traditional options like Google. While newcomers still need substantial work on their search indexes, Cue noted that some features are already compelling enough to lure users away.

Still, if and when these engines arrive in Safari, they likely won't be the default out of the gate. For now, they will simply join the list of alternatives in your settings.

The $20B insomnia and a world without iPhones

Why not rip the band-aid off and replace Google today? The math is just too painful.

Google pays Apple an estimated $20 billion every year to remain the default search engine across Apple devices. Cue admitted on the stand that he has literally "lost sleep over the possibility of losing the revenue share from their agreement," calling it the best deal financially.

Yet Cue also acknowledged that the shifting technological landscape is existential. "You may not need an iPhone 10 years from now as crazy as it sounds," he warned, emphasizing that AI is opening the door wide for aggressive newcomers.

Cue also revealed that prior to choosing ChatGPT for Apple Intelligence last year, Apple ran a "bake-off" between Google and OpenAI. Google's pitch fell flat because its term sheet contained demands Apple simply wouldn't stomach. Following the courtroom disclosures, Alphabet shares sank over 7%, while Apple dropped 2.5%.

Why it matters

For everyday users, Safari could soon turn into a much more versatile research hub. Instead of being funneled into ten blue links and sponsored ads, you will likely get to pick whether Perplexity, Claude, or ChatGPT parses the web directly from your URL bar.

For Google, this is a nightmare scenario unfolding on two fronts. If the court terminates the default deal, Google keeps $20 billion in cash, but it risks losing instant access to the most lucrative demographic in tech. If Safari users defect to conversational answer engines, Google's ad machine takes a direct hit.

We think Cue's testimony was a masterclass in corporate chess. By hyping up AI rivals, Apple is handing Google's defense team an argument that search is still competitive, hoping to keep the regulatory axe from falling on its $20 billion golden goose. But by actively testing Perplexity and OpenAI inside Safari, Apple is also making sure that if Google falls, Apple won't go down with it.