Apple Argues Its $20 Billion Google Search Deal May Be Unnecessary

In a bid to preserve its lucrative $20 billion annual deal with Google, Apple Inc. argued that the arrangement may become obsolete as the technology landscape evolves. Eddy Cue, Apple’s senior vice president of services, presented this argument during his testimony in the US Justice Department’s antitrust trial against Google. The deal, which makes Google the default search engine on Apple devices, has been a major revenue source for Apple, but Cue suggested that shifts in technology, particularly the rise of artificial intelligence (AI), could render it unnecessary. Cue pointed to Apple's plans to incorporate AI services like OpenAI’s ChatGPT and Perplexity AI into its Safari browser as a sign of the changing tide. He also noted that Google search queries on Apple devices had declined for the first time in April, with users increasingly opting for AI-based alternatives. Apple’s strategic pivot includes embracing AI search options, with Cue even suggesting that the iPhone may no longer be relevant in the future. While Apple doesn’t want to lose the current arrangement, which has been a cornerstone of its services revenue, it is exploring new revenue opportunities from AI-driven systems. The company sees potential for new AI partnerships that could rival Google’s dominance in the search space. This is particularly evident as Apple integrates other AI technologies, like OpenAI’s ChatGPT, into its digital assistant Siri and plans to add Google’s Gemini as an alternative search engine. The ongoing trial may reshape the future of this critical deal, with the outcome impacting both Apple and Google’s business models. Despite these potential changes, Cue expressed concerns about the loss of the revenue-sharing agreement, especially as other sources of income, such as the App Store commissions, face legal challenges. Nonetheless, Apple is also eyeing AI-driven opportunities to enhance its advertising and search revenue models.