Apple Hits Google's Battleship
One man has the power to tank the stocks of not one, but two multi-trillion dollar companies in an instant. No, I'm not talking about Donald Trump (for once). I'm talking about Apple SVP Eddy Cue. Here's Mark Gurman, Leah Nylen, and Stephanie Lai reporting for Bloomberg from Google's continually newsworthy antitrust remedies trial:
Apple is “actively looking at” revamping the Safari web browser on its devices to focus on AI-powered search engines, a seismic shift for the industry hastened by the potential end of a longtime partnership with Google.
Eddy Cue, Apple’s senior vice president of services, made the disclosure Wednesday during his testimony in the US Justice Department’s lawsuit against Alphabet Inc. The heart of the dispute is the two companies’ estimated $20 billion-a-year deal that makes Google the default offering for queries in Apple’s browser. The case could force the tech giants to unwind the pact, upending how the iPhone and other devices have long operated.
Granted, this statement is certainly somewhat political in nature and is definitely not unbiased, as it's Cue who has been the one trying to allow Apple to intervene in Google's own case to help ensure their insanely lucrative Safari search payments remain intact in some way. And he's been failing at that. And Google hasn't exactly been helpful. So option B is to blow up Google's future on the witness stand, I guess.
And I mean, he may not be wrong!
Beyond that upheaval, AI is already making gains with consumers. Cue noted that searches on Safari dipped for the first time last month, which he attributed to people using AI. Cue said he believes that AI search providers, including OpenAI, Perplexity AI Inc. and Anthropic PBC, will eventually replace standard search engines like Alphabet’s Google. He said he believes Apple will bring those options to Safari in the future.
Uh. That one little aside is massive news. It's is perhaps one of the most damning statistics ever shared about the future of Google Search. While Google itself continues to insist that everything is fine, the reality is that a partner like Apple, at lower volumes than Google itself, not to mention a likely more affluent and slightly younger user base, may see such impacts first.
And well... here we are.
“Prior to AI, my feeling around this was, none of the others were valid choices,” Cue said. “I think today there is much greater potential because there are new entrants attacking the problem in a different way.”
That feels like a message aimed at Google. Get back in line, or else. But also potentially to Wall Street: don't worry, we'll be fine without the Google deal (if it comes to that).
Interesting that Cue specifically singles out Perplexity as one of the options they've been talking to, as I've been writing for a while that such a partnership undoubtedly makes a lot of sense as it helps with both AI and search in particular.
Still, it sounds like Apple has also looked at Anthropic – also no surprise given the reports about a potential tie-up for coding capabilities – and Google's own Gemini, as has been widely reported and basically confirmed to be coming soon by Sundar Pichai during the same trial. More surprising are DeepSeek, then again, Apple is one of the few Big Tech players that has no issues with operating in China, unless it involves tariffs (well, or AI). And xAI. Apple and Elon Musk have a long, contentions history. Including more recently around Apple's integration of ChatGPT specifically.
Before ChatGPT was chosen last year as part of Apple Intelligence in iOS 18, there was a “bake-off” with Google, Cue said. He said Google had provided a term sheet that “had a lot of things Apple wouldn’t agree to and didn’t agree to with OpenAI.”
This sounds potentially dumb on Google's part, given, you know, all of the above, but who knows what those terms actually were...
Technology is changing fast enough that people may not even use the same devices in a few years, Cue said. “You may not need an iPhone 10 years from now as crazy as it sounds,” he said. “The only way you truly have true competition is when you have technology shifts. Technology shifts create these opportunities. AI is a new technology shift, and it’s creating new opportunities for new entrants.”
This comment is obviously going to get headlines on its own – Apple Exec: The iPhone is Doomed – but I read this more as someone making an almost off-handed comment about the theoretical future of AI. And actually, it seems more directed at the court to maybe take it easy on Google with these remedies – you know, such as maybe not ending their default search agreements. Because the market will do its thing in the end.
I agree with Cue about the technology shifts and his implied point about what will actually disrupt Google (again, he wants to get across the point that it will happen naturally, without the need for remedies that also perhaps hurt Apple). And all of this has the added benefit of downplaying Apple's own dominance in the current market with the iPhone. That might be coming up again soon.
Still, I would bet a lot of money that we still have iPhones in 10 years. Maybe we can talk about 20. Maybe.
But more generally, my my god man. In one testimony Cue managed to get headlines for suggesting both the end of Google Search and the end of the iPhone! And the stocks of both companies are acting accordingly!1
Lastly, I enjoyed Cue revealing that he's "lost sleep" over the potential end of the Google Search revenue arrangement with Apple. Which sort of undercuts his other points above. But also seems honest. I do imagine the potential of losing $20B+ in nearly pure profit overnight would keep you up at night.
One more thing: Cue went on to say that even if they didn't get the $20B+ a year, Apple would still make Google the default search engine because they want to get their customers the best experience. To that I say, oh really?
M.G. Siegler
M.G. Siegler
M.G. Siegler
1 Though I would also imagine Wall Street doesn't love the assertion that Apple might swap out Google Search for an AI search product any time soon, as it implies Apple cutting ties with the $20B+ a year payments – pure, meaningful profit for Apple – from Google before a judge even formally makes them.