Alphabet slides as Apple eyes Google overhaul – and UK probe looms
Alphabet – Google’s parent company – suffered its worst drop in shares since October on Wednesday, falling 7.5 per cent after the iPhone maker, Apple, revealed a historic sip in Safari search and hinted to a strategic shift to AI-powered rivals.
This move may be the first signs of the end for Google’s long held dominance.
The stock’s wipeout on Wednesday, which erased around $150bn to the Big Tech’s market value, followed Apple’s chief, Eddy Cue, revealing the firm is “actively looking at” integrating AI search providers in the form of the likes of OpenAI or Anthropic, into its Safari browser.
The shift could upend the $20bn a year deal that has made the tech behemoth the default search engine on all Apple devices – a key pillar of Google’s ad business.
“Fresh signs [have] emerged that Google search might finally be feeling the heat”, said Matt Britzman, equity analyst at Hargreaves Lansdown.
“Apple revealed that search volumes through Safari dropped in April – the first time that’s ever happened – and hinted it may bring AI powered search to its browser. Despite solid growth last quarter, it’s a fresh signal that Google’s dominance could be under real pressure”.
As part of Cue’s testimony in the ongoing US antitrust case against Google, the chief explained how generative AI is beginning to mould user behaviour.
“There’s enough money now, enough large players, that I don’t see how it doesn’t happen”, he said on the switch to AI powered search.
Still, Britzman cautioned against overreacting. He explained that “The 7.5 per cent selloff feels like an overreaction for a stock already trading at a discounted multiple, especiall since search revenue hasn’t missed a beat, even with the rise of ChatGPT”.
“It’s clear Alphabet’s role as the internet’s gatekeeper is starting to fade, but it still has a big opportunity to lead in a larger AI-driven web”.
Meanwhile, in the UK, the shake up comes as Google faces scrutiny from regulators.
In January, the Competition and Markets Authority (CMA) launched a formal investigation under its new ‘strategic market status’ regime to examine whether Google’s dominance is stifling competition.
Within the UK, 90 per cent of our search traffis runs through Google – a statistic which urged the CMA to assess if consumers and advertisers are able to get their fair deal too, and whether AI entrants could help rebalance the playing field.
With both US and UK regulators doubling down on the search giant, and Apple revealing its strategic realignment away from the brand, it appears that Google’s crown may be starting to slip.