Market giants Alphabet Inc. GOOGL GOOG and Apple Inc. AAPL saw their stocks tumble on Wednesday after reports suggested Apple may be reconsidering its lucrative search partnership with Google, with artificial intelligence emerging as the catalyst for potential industry disruption.

What Happened: Apple’s Senior Vice President of Services, Eddy Cue, testified in a U.S. antitrust trial that the company is “actively looking at” integrating an AI-powered search engine into Safari, evaluating alternatives from OpenAI, Anthropic and Perplexity AI.

Cue revealed Safari searches declined for the first time last month, attributing the shift to growing AI tool adoption. Alphabet shares plunged 7.51% to $152.80 while Apple dipped 1.14% to $196.25.

“AI is eating search,” stated Perplexity AI CEO Aravind Srinivas on X, as his company positions itself as a contender in the evolving search landscape.

Dan Niles, founder of Niles Investment Management, highlighted on X that the drop in Safari search activity aligns with Google’s recent performance, where year-over-year growth in paid clicks slowed to 2% in the first quarter of 2025—down from 5% in the same period last year and 8% in early 2023, following the rise of ChatGPT in late 2022.

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Why It Matters: A recent 9to5Mac comparison showed Perplexity “clearly outperformed or is at parity” with Apple’s Siri and OpenAI’s ChatGPT across most categories, according to Srinivas, emerging as the most versatile option by combining web-based intelligence with limited Apple app integration.

Niles predicted that companies like “OpenAI, Anthropic, Perplexity, xAI” will continue taking market share from traditional search, with “AI agents” accelerating this trend.

Despite these shifts, Cue indicated Google should remain Safari’s default search engine for now, particularly given the estimated $20 billion in annual revenue Apple receives from the arrangement.

Perplexity, backed by Jeff Bezos and NVIDIA Corp. NVDA, has gained momentum with recent Android launches and a SoftBank Corp. SFTBY partnership deploying 7,000 sales team members to drive enterprise adoption in Japan.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

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