Investors in Apple and Google are reportedly uneasy about the growing popularity of artificial intelligence (AI) search.
That’s according to a report Saturday (May 10) by Seeking Alpha, which said that Google’s shares fell 8% last week when an Apple executive said that searches originating from Google’s search engine in Apple’s Safari browser fell for the first time last month.
That executive, Apple senior vice president of services Eddy Cue, revealed that milestone while giving testimony in a Justice Department lawsuit against Google. He attributed the decreased searches to the increasing popularity of AI-based search offerings like OpenAI’s ChatGPT.
Cue also said Apple is considering adding AI search engines like Perplexity to Safari, where Google now dominates thanks to an ongoing revenue-sharing partnership with Apple.
The report noted that a pivot to AI will impact both Google and Apple, as that revenue-sharing agreement generated $20 billion for the latter company in 2022. Google lost close to $150 billion in market capitalization following Cue’s testimony, while Apple’s shares dropped around 1%.
The report also included comments from analysts who argued the rise of AI-powered search poses a threat to both companies.
“Although some smartphone users may not regard AI features as very important, the times are changing, and Apple has to cater to the growing demand for consumer AI features,” analyst Dilantha De Silva said.
And analyst Nexus Research contended that Cue’s statements on Google show the company’s main business is in danger.
“While Google is also in talks with Apple to integrate its Gemini assistant with Siri, Alphabet is unlikely to enjoy the “default” status that it has enjoyed for many years with Google Search on iPhones, given that Apple is also in talks with other AI rivals like Perplexity,” Nexus said.
Meanwhile, OpenAI is making a play for the consumer market by recruiting Instacart CEO Fidji Simo to run its applications business, PYMNTS wrote last week, arguing this signifies that the company is “more than just an AI model builder.”
“OpenAI clearly wants to own the consumer platform,” Julia Huang, founding partner at Vesey Ventures, told PYMNTS. “They have a great shot at doing it and Fidji’s experience at Instacart in bringing together merchants and consumers would be really valuable.”
Huang added, “The challenge to Google is clear already in search,” since people have been moving to AI chatbots for searches. “I think this will be a play to close the loop around the whole transaction.”
