(CTN News) – Google’s stock (GOOG) experienced a decline of over 6% on Wednesday because of an unexpected event involving Apple.

The sustainability of Google’s fundamental search operations has been the subject of inquiries as a result of this incident. In the ongoing antitrust litigation against Alphabet, Eddy Cue, Apple’s services executive, provided testimony.

He declared that the organization is currently engaged in extensive research regarding the integration of artificial intelligence-enabled search engines, including Perplexity, into future versions of Safari, Apple’s default web browser.

The proposed approach would significantly alter the way in which millions conduct online queries, thereby jeopardizing Google’s dominant position.

What are the factors contributing to the decline in Google’s stock?

Alphabet, the parent company of Google, encountered stock pressure during the court testimony of Eddy Cue, Apple’s director of services. Cue’s findings attributed the uncommon decrease in Safari searches over the past month to the rise in AI-powered solutions.

Apple is currently in discussions with Perplexity AI, OpenAI, and Anthropic to explore potential partnerships that could potentially replace current search engines, such in Safari, as reported by Cue.

This will have substantial consequences. To preserve its position as the default search engine for Safari, Google is required to provide Apple with an annual sum exceeding $20 billion. We anticipate that Apple’s adoption of AI-driven search will significantly impact Google’s advertising revenue.

Investors are reacting to the growing threat of artificial intelligence competition to dominant market position in search engines and its profitable partnerships with companies such as Apple.

Is Apple’s strategy distinct from that of Google?

At present, Google pays Apple approximately $20 billion annually to preserve its position as the default search engine in Safari.

Apple will continue to generate revenue, while will preserve its percentage of Mac and iPhone users. This scenario serves as an illustration of a partnership that is mutually beneficial.

Nevertheless, Cue maintained that Safari’s demand had decreased for the first time in the previous month. He believes that individuals are increasingly relying on AI-powered platforms, such as Perplexity and ChatGPT, to address their inquiries, as opposed to traditional web queries.

Cue speculated that Apple’s recent integration of ChatGPT into its new Apple Intelligence platform would result in the development of additional AI-driven search capabilities.

Despite his assertion that there is no ongoing discussion regarding the complete replacement of Google, Apple’s present strategy has undoubtedly piqued interest.

The Competitive Environment of Google’s Artificial Intelligence

This acquisition is not an isolated transaction, as evidenced by involvement. It embodies the comprehensive perspective that is indispensable for the future of search.

The rapid advancement of artificial intelligence-driven information retrieval technology has resulted in emerging firms such as OpenAI and Perplexity competing with Google.

Google is presently conducting a test of a more conversational “AI Mode” called AI Overviews, which combines intelligent responses generated by AI with traditional search results. Gemini, an autonomous AI chatbot, is offered by the startup, although it has not yet been unified into a single experience, as several of its competitors have done.

Simultaneously, Microsoft’s Copilot has emerged as a preferred AI-driven search alternative, suggesting that traditional search methodologies are subject to intense competition.

Investor reactions are the cause of Alphabet’s share price decline.

The sentiments on Wall Street were immediate. On Tuesday, Alphabet, the parent company of Google, experienced a substantial decline in its stock price, which ultimately closed at $165.20.

Despite the company’s market capitalization surpassing $2 trillion, investor confidence is eroding as a result of the growing ambiguity surrounding its search capabilities.

In its most recent quarterly report, Mairs & Power, an investment firm, underscored Alphabet’s persistent challenges and subpar performance.

The fund argues that the fund’s portfolio contracted as a result of concerns regarding ability to adapt to the swiftly evolving artificial intelligence sector and its pace, which in turn resulted in a decline in Google’s stock price.

maintain its reputation as a formidable adversary in spite of obstacles.

The reliability of Google’s foundation is beyond question. The company’s sales in the most recent quarter totaled $90.2 billion, which represents a 12% increase from the previous year.

Alphabet shares were held by 174 large funds at the end of the first quarter, compared to only 160 hedge funds at the end of the previous quarter.

However, the message is clear: investors are eager to monitor Google’s progress. Google’s position in the upcoming phase of the internet will likely be determined by its long-term objectives, given Apple’s emphasis on AI search and the growing consumer adoption of chat-based technology.

SOURCE: GU