Apple executive Eddy Cue rocked Alphabet shares earlier this week when, testifying during the U.S. antitrust case against Alphabet, he said that the volume of Google searches on Apple’s Safari web browser had declined for the first time in more than two decades. Cue attributed that declining volume to people using new AI-driven tools to find information.
The bombshell comments drove Alphabet’s stock price down as much as 9% in intraday trading, although they have subsequently clawed back some of those losses and are currently about 6% lower than before Cue’s testimony.Investors have been worried that AI chatbots will eventually displace Google Search, which accounts for 55% of Alphabet’s overall revenues, and is believed to also account for a much larger percent of the company’s profits. (We don’t know exactly how much, because Alphabet does not break out its profits by the same segments for which it reports revenue.) But trying to tease out exactly how AI competition is impacting Google, and which rivals might be gaining at Google’s expense, is tricky.
There's more to Google's traffic from Apple than just Safari
In response to Cue’s testimony, Google released a statement that, without saying it directly, confirmed what Cue had said about Safari, while also implying investors were misinterpreting the data. “We continue to see overall query growth in Search. That includes an increase in total queries coming from Apple’s devices and platforms,” the company said.
In other words, people are searching more, not less, but they aren’t necessarily using Apple’s Safari browser to do it. Google also said it was seeing increased use of new modes of searching, such as image searches with Google Lens or voice-based searches. These features are not supported as well in Safari, which may mean people are turning to Google’s Chrome browser or the Google app instead.Alphabet has also made a number of comments about its own increasing use of generative AI to provide “AI Overviews”—capsule answers to search queries instead of just a ranked list of links—and its impact on Search. For instance, for more than a year Alphabet has insisted that AI Overviews increase search usage. Independent data from the web analytics firms and SparkToro and Datos seems to confirm this, showing that the total number of Google searches grew more than 20% year over year in 2024, the first full year that AI Overviews existed.Alphabet also put out a statement in March, based on what it said was internal company data from January 2025, that AI Overviews resulted in more “commercial searches,” where people were looking to buy a particular product or service.But Google executive Sissie Hsiao, who oversaw the rollout of Google’s Gemini chatbot product, testified in April at the Google antitrust trial that since the debut of ChatGPT, Google had seen a decline in certain searches around “math and homework.” These searches don’t typically deliver much ad revenue, Hsiao said, but she also said that Vidhya Srinivasan, the executive in charge of Google’s ads business, believes that AI will ultimately cannibalize Search revenue.
Overall Search volume is up, Alphabet insists. But still Google's market share may be shrinking.
While overall search volume may be up, Google may be grabbing a bit less of that larger pie. Data from web analytics firm Statcounter has shown a small, but marked decline in Google Search’s global market share since the debut of OpenAI’s ChatGPT in late November 2022. Google’s share has gone from about 93% of traditional search engine traffic to just under 90% over that period. Google’s fall below 90%, which occurred in the last quarter of 2024, is the first time the company has dipped below that threshold since 2015.StatCounter’s figures don’t directly assess traffic volumes of traditional search engines against usage of AI tools such as ChatGPT. That said, it could be telling that during the same period, Microsoft’s Bing—which incorporates the company’s Bing chatbot and is powered by OpenAI’s GPT models—has seen a small uptick in market share, going from about 3% to 3.9%, according to Statcounter.Data released earlier this week from SimilarWeb, another web site tracking company, also shows a 2% decline in market share for Google year-over-year. And SimilarWeb’s data show all the traditional search engines losing traffic in the past 12 months, a likely indication that people are turning more to AI tools for answers. (Still, the SparkToro and Datos figures indicate that ChatGPT was seeing only about 1% of the total traffic volume that Google Search saw in 2024.)SimilarWeb’s latest data says that of these new AI tools, ChatGPT has the largest market share, with about 80% of total AI chatbot usage, while DeepSeek’s AI chatbot has 6.5%, Google’s AI tools have 5.6%, X.com’s Grok 2.6%, and Perplexity about 1.5%.Younger people are also increasingly searching on social media for product, travel, and restaurant recommendations, rather than using Google. A Bernstein Research report from September 2024 cited two separate surveys as finding that about half of Gen Z consumers were likely to use platforms such as TikTok or Instagram instead of Google as they primary search tool.
Revenues are up, but growth rates are slowing
How quickly these trends may eat into Google’s revenues is unclear. In the first quarter, Google Search revenues grew 7%—which was about half the rate at which those revenues expanded throughout 2024. But they are still growing.
Philipp Schindler, Alphabet’s senior vice president and chief business officer, told investors on the company’s first quarter earnings call last month that Alphabet has seen “monetization at approximately the same rate” since the launch of AI Overviews. But he also pointedly declined to answer questions about click-through rates since the introduction of the AI capsule answers. And, the next morning, Alphabet’s 10Q SEC filing revealed that the growth of its “Google Search & Other” paid clicks had slowed to 2%, down from a 5% growth rate throughout 2024.JPMorgan analyst Doug Anmuth, in an otherwise sanguine take on Cue’s testimony, noted that “we believe AI Overviews are a factor in slower paid click growth as they likely have lower ad load & more relevant natural search results.” Two recent studies from marketing firms that help companies increase their presence on search engine results have indicated big fall-offs in click-through-rates—as much as 35%—for AI Overviews compared to traditional search.
According to Hsiao’s antitrust trial testimony, Google ad chief Srinivasan was pushing for the inclusion of ads in Gemini AI chatbot answers as soon as possible to compensate for generative AI tools’ eventual cannibalization of Google Search, the company’s vital profit engine. “The writing is on the wall,” Srinavasan was quoted as saying in an October 2024 meeting according to notes of that meeting introduced at the trial.Alphabet is not in immediate danger. It remains far and away the dominant player in search and has a diversified revenue base, with YouTube and its Cloud business, to lean on too. The search giant still has time to figure out how to escape its innovator's dilemma—but Cue's testimony is a reminder that the clock is ticking.
This story was originally featured on Fortune.com
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