Apple govt Eddy Cue rocked Alphabet shares earlier this week when, testifying in the course of the U.S. antitrust case in opposition to Alphabet, he stated that the amount of Google searches on Apple’s Safari net browser had declined for the primary time in additional than twenty years. Cue attributed that declining quantity to folks utilizing new AI-driven instruments to search out info.
The bombshell feedback drove Alphabet’s inventory worth down as a lot as 9% in intraday buying and selling, though they’ve subsequently clawed again a few of these losses and are presently about 6% decrease than earlier than Cue’s testimony.
Buyers have been frightened that AI chatbots will finally displace Google Search, which accounts for 55% of Alphabet’s total revenues, and is believed to additionally account for a a lot bigger % of the corporate’s income. (We don’t know precisely how a lot, as a result of Alphabet doesn’t get away its income by the identical segments for which it studies income.) However making an attempt to tease out precisely how AI competitors is impacting Google, and which rivals may be gaining at Google’s expense, is difficult.
There’s extra to Google’s site visitors from Apple than simply Safari
In response to Cue’s testimony, Google launched a press release that, with out saying it immediately, confirmed what Cue had stated about Safari, whereas additionally implying buyers had been misinterpreting the info. “We proceed to see total question development in Search. That features a rise in whole queries coming from Apple’s gadgets and platforms,” the corporate stated.
In different phrases, individuals are looking extra, not much less, however they aren’t essentially utilizing Apple’s Safari browser to do it. Google additionally stated it was seeing elevated use of latest modes of looking, corresponding to picture searches with Google Lens or voice-based searches. These options will not be supported as properly in Safari, which can imply individuals are turning to Google’s Chrome browser or the Google app as an alternative.
Alphabet has additionally made various feedback about its personal rising use of generative AI to offer “AI Overviews”—capsule solutions to look queries as an alternative of only a ranked record of hyperlinks—and its influence on Search. For example, for greater than a yr Alphabet has insisted that AI Overviews enhance search utilization. Impartial information from the net analytics companies and SparkToro and Datos appears to verify this, exhibiting that the overall variety of Google searches grew greater than 20% yr over yr in 2024, the primary full yr that AI Overviews existed.
Alphabet additionally put out a press release in March, primarily based on what it stated was inside firm information from January 2025, that AI Overviews resulted in additional “industrial searches,” the place folks had been seeking to purchase a selected services or products.
However Google govt Sissie Hsiao, who oversaw the rollout of Google’s Gemini chatbot product, testified in April on the Google antitrust trial that for the reason that debut of ChatGPT, Google had seen a decline in sure searches round “math and homework.” These searches don’t usually ship a lot advert income, Hsiao stated, however she additionally stated that Vidhya Srinivasan, the manager answerable for Google’s advertisements enterprise, believes that AI will in the end cannibalize Search income.
General Search quantity is up, Alphabet insists. However nonetheless Google’s market share could also be shrinking.
Whereas total search quantity could also be up, Google could also be grabbing a bit much less of that bigger pie. Knowledge from net analytics agency Statcounter has proven a small, however marked decline in Google Search’s world market share for the reason that debut of OpenAI’s ChatGPT in late November 2022. Google’s share has gone from about 93% of conventional search engine site visitors to only below 90% over that interval. Google’s fall under 90%, which occurred within the final quarter of 2024, is the primary time the corporate has dipped under that threshold since 2015.
StatCounter’s figures don’t immediately assess site visitors volumes of conventional engines like google in opposition to utilization of AI instruments corresponding to ChatGPT. That stated, it may very well be telling that in the identical interval, Microsoft’s Bing—which includes the corporate’s Bing chatbot and is powered by OpenAI’s GPT fashions—has seen a small uptick in market share, going from about 3% to three.9%, in line with Statcounter.
Knowledge launched earlier this week from SimilarWeb, one other site monitoring firm, additionally reveals a 2% decline in market share for Google year-over-year. And SimilarWeb’s information present all the normal engines like google shedding site visitors up to now 12 months, a probable indication that individuals are turning extra to AI instruments for solutions. (Nonetheless, the SparkToro and Datos figures point out that ChatGPT was seeing solely about 1% of the overall site visitors quantity that Google Search noticed in 2024.)
SimilarWeb’s newest information says that of those new AI instruments, ChatGPT has the biggest market share, with about 80% of whole AI chatbot utilization, whereas DeepSeek’s AI chatbot has 6.5%, Google’s AI instruments have 5.6%, X.com’s Grok 2.6%, and Perplexity about 1.5%.
Youthful individuals are additionally more and more looking on social media for product, journey, and restaurant suggestions, moderately than utilizing Google. A Bernstein Analysis report from September 2024 cited two separate surveys as discovering that about half of Gen Z customers had been possible to make use of platforms corresponding to TikTok or Instagram as an alternative of Google as they major search instrument.
Revenues are up, however development charges are slowing
How rapidly these traits could eat into Google’s revenues is unclear. Within the first quarter, Google Search revenues grew 7%—which was about half the speed at which these revenues expanded all through 2024. However they’re nonetheless rising.
Philipp Schindler, Alphabet’s senior vp and chief enterprise officer, instructed buyers on the corporate’s first quarter earnings name final month that Alphabet has seen “monetization at roughly the identical price” for the reason that launch of AI Overviews. However he additionally pointedly declined to reply questions on click-through charges for the reason that introduction of the AI capsule solutions. And, the following morning, Alphabet’s 10Q SEC submitting revealed that the expansion of its “Google Search & Different” paid clicks had slowed to 2%, down from a 5% development price all through 2024.
JPMorgan analyst Doug Anmuth, in an in any other case sanguine tackle Cue’s testimony, famous that “we consider AI Overviews are a think about slower paid click on development as they possible have decrease advert load & extra related pure search outcomes.” Two latest research from advertising companies that assist corporations enhance their presence on search engine outcomes have indicated massive fall-offs in click-through-rates—as a lot as 35%—for AI Overviews in comparison with conventional search.
Based on Hsiao’s antitrust trial testimony, Google advert chief Srinivasan was pushing for the inclusion of advertisements in Gemini AI chatbot solutions as quickly as potential to compensate for generative AI instruments’ eventual cannibalization of Google Search, the corporate’s important revenue engine. “The writing is on the wall,” Srinavasan was quoted as saying in an October 2024 assembly in line with notes of that assembly launched on the trial.
Alphabet will not be in speedy hazard. It stays far and away the dominant participant in search and has a diversified income base, with YouTube and its Cloud enterprise, to lean on too. The search large nonetheless has time to determine find out how to escape its innovator’s dilemma—however Cue’s testimony is a reminder that the clock is ticking.
This story was initially featured on Fortune.com
