Alphabet Inc., the parent company of Google, saw its stock tumble by more than 6% on Wednesday after a senior Apple executive delivered surprising testimony in a high-profile antitrust trial, raising concerns about the future of Google’s lucrative default search engine deal on Apple devices.
During the ongoing Department of Justice antitrust case against Google, Apple’s Senior Vice President of Services, Eddy Cue, revealed under oath that Apple has been internally exploring alternatives to Google as the default search engine on its Safari browser. Cue also disclosed that the long-standing partnership—reportedly worth over $18 billion annually—may not be renewed under its current terms.
The testimony triggered a wave of anxiety across the tech and financial sectors, with investors interpreting the remarks as a sign that the dominant search engine's grip on default status across Apple’s ecosystem may be slipping.
Potential Cracks in a Lucrative Alliance
The revelation comes amid heightened scrutiny over Google’s search engine dominance and its multibillion-dollar payments to secure default status on browsers and mobile devices. Analysts say the arrangement has been critical in maintaining Google’s dominance in the search market, particularly on mobile devices.
“If Apple decides to walk away or renegotiate aggressively, it could be a huge blow to Google’s search traffic and advertising revenue,” said Lisa Gorman, a technology analyst at Raymond Holdings. “This partnership has essentially helped Google maintain its user funnel across billions of Apple devices worldwide.”
In court, Cue stated, “We’re always evaluating what’s best for our users, including who we work with for search. We’ve had a successful relationship with Google, but it’s not set in stone.” He added that Apple had engaged in “serious internal discussions” about switching to an alternative, or even launching its own search platform.
Wall Street Reacts Swiftly
Following the testimony, Alphabet shares dropped sharply during afternoon trading, wiping out nearly $90 billion in market capitalization. The broader Nasdaq tech index also dipped slightly, as investors grew jittery about the possible long-term ramifications.
Meanwhile, shares of other search engine players, including Microsoft (Bing) and privacy-focused DuckDuckGo, saw modest gains amid speculation that Apple could look elsewhere for a default search partner.
A Tectonic Shift in Big Tech?
The Justice Department's case against Google alleges that the company has engaged in monopolistic practices by locking in exclusive search agreements that crowd out competition. Apple’s testimony could become a pivotal piece of evidence supporting the DOJ’s arguments.
“This may be the beginning of a major shift in how tech giants do business with each other,” said antitrust expert and law professor Martin Selk. “Apple’s words carry significant weight. If they are seen distancing themselves from Google, it adds credibility to the government's case.”
Neither Google nor Apple issued immediate public statements following Cue’s appearance in court. A spokesperson for the DOJ declined to comment on the ongoing trial.
As the case continues, industry watchers say the outcome could reshape the search and mobile landscape, potentially impacting everything from ad revenues to user privacy norms.
Looking Ahead
With weeks of testimony still ahead in the DOJ’s landmark case, tech investors and competitors alike will be watching closely for any further hints of Apple’s intentions and Google’s defense. If the longstanding alliance between the two tech giants begins to unravel, it could mark one of the most significant power shifts in Silicon Valley in over a decade.