Apple Contemplates Shift to AI-Powered Search, Signaling End of Google Era

(vtrik) -- Apple Inc. is "actively exploring" a overhaul of the Safari web browser on its devices to concentrate on AI-driven search engines, marking a significant change in the sector accelerated by the possible termination of their long-standing collaboration with Google.

Eddy Cue, Apple’s senior vice president of services, revealed this information on Wednesday when he testified in the U.S. Justice Department’s case against Alphabet Inc. The crux of the legal disagreement lies in the approximate figures presented by both corporations. $20 billion-a-year The agreement allows Google to be the primary search engine in Apple’s browser. This lawsuit might compel these technology powerhouses to terminate this deal, potentially altering the way iPhones and other devices function for years.

Apart from that disruption, artificial intelligence has started to make strides among consumers. Last month, Cue observed that searches on Safari declined for the first time, attributing this shift to increased use of AI. According to Cue, he thinks that AI-driven search platforms such as OpenAI, Perplexity AI Inc., and Anthropic PBC will ultimately supplant traditional search engines like Google under Alphabet. Additionally, Cue expressed his belief that these alternatives will be integrated into Safari by Apple in the near future.

"We'll include them in the list—they likely won't be the standard option," he stated, suggesting that improvements are still needed. Specifically, Cue mentioned that the company has held talks with Perplexity.

Before AI, I felt that none of the alternatives were viable options," Cue stated. "However, now I believe there is significantly more potential due to new participants tackling the issue with fresh approaches.

The impending transition marks a significant change for the legendary iPhone and an organization boasting over 2 billion active devices. Ever since Apple introduced its pioneering smartphone back in 2007, people have used Google for online searches. However, customers are now stepping into a realm where artificial intelligence from various firms takes center stage.

Investors viewed the testimony as an ill omen for both Alphabet and Apple, possibly forcing them to terminate a profitable partnership.

On Wednesday, Alphabet's stock price dropped by 7.3%, marking its largest decrease since February. Similarly, Apple's shares took a hit following Cue’s remarks and closed 1.1% lower. In response, Google stated: blogpost It has witnessed a rise in search inquiries coming from Apple devices.

Apple now includes OpenAI’s ChatGPT among the options available through the Siri virtual assistant and plans to incorporate Google’s AI search tool, Gemini, before the end of the year. According to Cue, Apple explored partnerships with several companies such as Anthropic, Perplexity, the Chinese firm DeepSeek, and Grok from Elon Musk’s xAI for this initiative. He mentioned that their deal with OpenAI permits them to integrate additional AI service providers into their OS, which could even include services developed internally by Apple itself.

Prior to ChatGPT being selected for inclusion in Apple’s Siri during the development of iOS 18 last year, there was a "bake-off" involving Google, according to Cue. He mentioned that Google offered terms that included several points not acceptable to Apple, similar to those they did not accept from OpenAI.

Cue mentioned that technology evolves so rapidly that what we consider standard today might be obsolete within just a few years. "It seems far-fetched, but you might not require an iPhone ten years down the line," he noted. "True rivalry emerges solely during technological transitions. These changes open up possibilities. Artificial intelligence represents such a transition, and it’s paving the way for fresh contenders."

Cue said that, in order to improve, the AI players would need to enhance their search indexes. But, even if that doesn’t happen quickly, they have other features that are “so much better that people will switch.”

"There's currently sufficient funding and major participants involved that I can't envision it not occurring," he stated, commenting on the transition from conventional search to artificial intelligence.

Cue also mentioned that large language models, which form the core of generative AI, will keep getting better, providing users additional incentive to alter their routines.

Nevertheless, he thinks Google ought to stay as the default option in Safari, mentioning that this situation keeps him awake due to concerns about potentially losing the income share from their deal. He noted that Apple’s current contract with Google regarding routine searches continues to offer the most advantageous financial conditions.

Cue oversees services such as iCloud, TV+, and Apple Music, and is also recognized as the company’s top negotiator for deals. If the search partnership ends, any resulting financial setbacks will appear under his department's performance metrics. Recently, the services sector has emerged as a significant highlight for the business amid slower hardware sales. This segment achieved an all-time high revenue of $26.6 billion during the quarter ending in March.

Cue’s group is expected to continue losing income Following a judge’s directive compelling Apple to permit U.S.-based developers to facilitate payments for in-app purchases outside the App Store,Apple could lose up to 30% of revenue per transaction as a result.

In the previous year, Apple extended its partnership with Google to incorporate Google Lens into the Visual Intelligence capabilities featured on the newest iPhone models. This enables users to snap a photo and utilize Google’s artificial intelligence for analysis purposes. Additionally, Cue mentioned that its contract with Microsoft’s Bing, which isn’t the default choice within Safari, has been updated to an annual renewal basis.

Apple's artificial intelligence capabilities have fallen short compared to its competitors. Unlike them, Apple lacks an AI-powered search engine and has had to postpone significant enhancements for Siri, which relies on user data to handle requests more effectively. The tech giant will kick off its yearly developers' event on June 9, where they aim to unveil updates to their AI framework known as Apple Intelligence.

(Updated to include Google’s statement in the eighth paragraph.)

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