Apple executive Eddy Cue today revealed that search query volumes on Apple devices, where Google is the default search engine, declined last month for the first time in over two decades as more users turn to generative AI tools, leading to a drop in the stock price of Google's parent company, Alphabet.
Apple executive Eddy Cue today revealed that search query volumes on Apple devices, where Google is the default search engine, declined last month for the first time in over two decades as more users turn to generative AI tools, leading to a drop in the stock price of Google's parent company, Alphabet."For the first time ever in over 20 — I think we've been at this for 22 years — last month, our search volume actually went down," Cue, who was testifying for Google in a monopolization trial, said in a Washington, DC court.
"That has never happened in 20 years. If you ask what's happening, it's because people are using ChatGPT. They're using Perplexity. I use it at times," he said.
Cue is a key witness in the lawsuit brought by the US Department of Justice and a coalition of states seeking to hive off the Chrome browser from Google and impose several behavioral remedies.
Cue also said Apple is "actively looking" to add an AI-powered search tool to Safari. Such a move would mean an end to the commercial relationship between Apple and Google, under which Google has paid Apple around $20 billion annually to be the default search engine on Safari for iOS. That exclusivity deal lies at the heart of the government's case against Google.
Following Cue's testimony, Alphabet shares fell 7.51 percent to $152.80, the lowest level in over three weeks. Media reports estimated the stock price collapse wiped out roughly $140 billion in the tech giant’s market capitalization. In response, Google issued a press statement.
"We continue to see overall query growth in Search. That includes an increase in total queries coming from Apple’s devices and platforms," the statement said.
"More generally, as we enhance Search with new features, people are seeing that Google Search is more useful for more of their queries — and they’re accessing it for new things and in new ways, whether from browsers or the Google app, using their voice or Google Lens. We’re excited to continue this innovation and look forward to sharing more at Google I/O," the company said.
Cue, who is testifying a second time for Google, said, "We always want competition. We like having other search providers." The Apple executive previously testified in late 2023 during a three-month long liability trial. In August 2024, US District Judge Mehta ruled that Google had illegally monopolized the Internet search and search text ads markets.
"I am very, very interested in what's happening in the market today. It's changed significantly since we were [last] here, because of AI technology," Cue said.
"But nobody's quite there yet, but we're seeing large corporations from Meta to OpenAI to Microsoft investing a significant amount in AI. Plus, new companies like Grok and DeepSeek are investing, and there's no question that people today are searching using those products," Cue said.
— Google is best, for now —
John Schmidtlein, counsel for Google, asked the Apple executive about the DOJ’s proposed remedy to end Google’s illegal monopoly, which would prevent Google from paying a revenue share to Apple in exchange for any type of promotion or default setting on Safari.
Cue replied he had a “very difficult time” in understanding that proposal.
"I did read Your Honor’s statement when you mentioned that it was a disincentive for us to do a search engine based on the payments that we were receiving from Google. I can't say I would disagree with that statement,” Cue said.
The Apple executive said he also understands Google’s payments are significant, but over the past 20 years, it “wasn't that much of a significant amount of money.”
“And we were never interested in doing a search engine because we were very happy partnering with someone. We can't do everything, so we have to choose the things that we do,” Cue said.
The Apple executive said his company has always “felt like Google does an amazing job” because they have incredible talent and skill. Apple did not have competency in search engines and chose to do other things, he added.
“So, yeah, I find it difficult to understand the concept of us not being compensated for the services that we've rendered. The other problem with it is we don't really have a choice today,” Cue said.
Should Apple provide another search engine instead of Google, he said users would still pick Google “because it is the best search engine,” and this has been tried over the last 20 years.
“Microsoft did it with their browsers. Other browsers have used other defaults, and Google has always won,” Cue said.
“It seems if the court has found that Google has done something wrong here, that somehow the result of that is that we no longer get compensated for the services that we're rendering, and Google gets to keep all the money, that just seems crazy to me,” he said.
The judge stepped in with a hypothetical scenario. “Say there was a remedy that prevented Google from paying Apple a revenue share. Apple still has a browser and room for a default search engine. Has Apple thought about what it would do in that circumstance with respect to a default?”
Cue replied that ultimately Apple wants to do what's best for the customer. “That is our number one priority,” he said. “What's best for the customer today is to put Google as a default search. So, I don't think you can change that.”
If Mehta rules that Apple should provide a choice screen with other search engines alongside Google as options for users to pick from, Cue said he doesn’t think that will be highly effective, given the history he has seen with choice screens. “Of course we would do that, but I think most people would still pick the best product. We have to pick what's best for our customers, and today that is still Google.”
Cue said he doesn’t think there is “anything that's going to change Google being the best.”
“Now Google's still very good, and they may still continue to be the best from that standpoint, but we're seeing some real investment by taking LLMs [language learning models] and search indexes and combining those two things to provide what I think is potentially a better experience,” the Apple executive said.
Google has started offering “AI Overviews” in its search engine results page, but there's a long way to go, he said.
— Judge quizzes Apple —
Judge Mehta quizzed Cue again, prefacing it by saying it is a “heavy question” as well as a fact that was revealed during the liability trial in 2023: that Google paid $26.34 billion to Apple to make Google Search the default engine in 2021 (see here).
“Can you at a high level or whatever level you care to share with me describe the impact the loss of revenue share would have on Apple?” the judge asked.
As Apple is a large corporation, Google’s revenue share payments are not the majority of the iPhone maker’s revenue, but they are a significant amount of money, Cue said.
Apple uses that money to develop the operating system, and so it would have an impact on its ability to create new products and new capabilities in the OS. “It is a significant issue. It's a significant amount of money, and so you can't just say, ‘Okay, that just disappears, and there's no impact to that,'” Cue said. “That's money that we're using on engineers to build what we do.”
Mehta asked if the loss of that money would have an impact on Apple's business operations, on employees and business strategy.
“It lets us do less, and doing less means less products, less engineers, less revenue. It's a significant impact because it's not a small amount,” the Apple executive said. “You can't just turn around the next day and find an alternative that is at that level.”
— Apple and OpenAI —
The judge continued with another question, asking if Apple had considered preloading an AI chatbot in its browser or on Apple Intelligence.
Apple Intelligence is a personal AI system meant to enhance user experience by leveraging on-device and server-based models.
Cue said Apple already has a deal with Apple Intelligence after the smartphone maker had done an evaluation of all of the existing AI products, including Google’s Gemini. “We found that OpenAI was better,” and so Apple inked a deal with OpenAI that was announced in June 2024, he said.
“A follow-on to your question is, have we considered adding one of these AI providers as a search choice into Safari? That's something we're actively looking at,” Cue said.
At present, none of the AI search providers are “good enough” or what customers wanted, the executive said. “But we've been pretty impressed with what Perplexity has done, so we started some discussions with them about what they're doing.”
Apple has also talked to OpenAI, Cue said. “So, I certainly would expect that over the coming year that we will add other choices to the search choice in the browser, because I think those products are getting better and better.”
— DOJ’s cross-examination —
During cross-examination, DOJ counsel Adam Severt asked Cue about his statement that AI firms are not ready yet when it comes to providing search results.
Cue said that they're “not good enough yet,” but AI companies are moving “incredibly fast.”
“Faster than I ever thought, and faster than most anybody has ever thought. But it's very early. It's less than two years. They're making tremendous progress, and the most important part of it is they're extremely well-funded. They're very large companies, so it's not a five-person operation,” he said.
Severt asked if the judge’s remedy order can help accelerate new AI firms in building their search index, would that be good for Apple?
The Apple executive said that having a better search index is good for Apple and that they “have to” improve their index.
How they do it and whether Google is made to share any of its search data is difficult to know, Cue said. “There's no question the index needs to improve on all of these other sites.”
Severt quizzed the executive about ongoing discussions between Google and Apple on the potential integration of Gemini into Apple Intelligence. Cue said that Google is investing a significant amount, and “if they get better, it's something we will definitely consider adding.”
Apple said the same thing to Anthropic and Claude. “We've looked at others from Grok and DeepSeek as well,” Cue said.
The DOJ has previously alleged that Google is employing the same monopoly playbook that was found anticompetitive by trying to leverage its AI tool Gemini into default search exclusivity agreements with partners.
"Even with OpenAI, we just didn't feel comfortable enough that whoever we picked, whether it was Google or OpenAI — given how fast the technology was moving — that we could put ourselves in a position that we would be stuck with one for the long term," Cue said. "We wanted to make sure that we had the capability to switch if we so chose."
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