Apple's AI-Powered Search Ambitions Shake Up Google’s Market Stronghold

On May 7, during testimony in the U.S. Department of Justice's antitrust lawsuit against Google, Apple Inc.'s Senior Vice President Eddy Cue unveiled Apple's plan to introduce AI-powered search engine options in its Safari browser. The move is seen as part of Apple's broader strategy to incorporate artificial intelligence across its products. Cue mentioned potential collaborations with AI services such as OpenAI, Perplexity, and Anthropic, although these may not become the default options.

The introduction of AI-driven search options comes in response to a notable decrease in Safari's search volume last month, suggesting users are increasingly turning to AI tools for information retrieval. In an effort to recapture this audience, Apple is testing advanced functionalities in Safari 18, including a "smart search" option and a "web eraser" feature. The "smart search" utilizes on-device AI technology to recognize and summarize web content, while "web eraser" allows users to remove specific content such as ads or images from web pages. These features are expected to be released with iOS 18 and macOS 15 later in 2024.

Apple’s decision to explore AI search options is part of an ongoing effort to enhance its AI ecosystem, following earlier upgrades to products like Siri. However, technical challenges have delayed the development of a proprietary AI system. By incorporating third-party AI search functionalities into Safari, Apple marks a significant shift in its AI strategy.

This strategic move could pose a direct challenge to Google's dominance in the search market, especially given Apple and Google's existing agreement worth approximately $20 billion that positions Google as Safari’s default search engine. If Apple introduces multiple AI search providers in Safari, it might undermine Google's stronghold.

The announcement had immediate market repercussions, leading to a significant decline in Alphabet's stock prices, with a 7.6% drop that erased over $150 billion in market value. As AI search technologies continue to evolve, they present a formidable challenge to conventional search engines and herald a shift in how users access online information. While Google continues to advocate for the necessity and utility of traditional search engines, the growing preference for AI-based tools among users suggests a potential shift in search habits.