Washington (AFP) – Shares in Google parent Alphabet plunged more than eight percent on Wednesday after Apple executive Eddy Cue testified in federal court that Google’s search traffic on Apple devices declined last month for the first time in over two decades. Cue, Apple’s senior vice president of services, told the Washington antitrust trial that Google was losing ground to AI alternatives like ChatGPT and Perplexity. His revelation that this decline “has never happened in 22 years” sent shockwaves through Wall Street, wiping more than $170 billion from Google’s market capitalization in a single trading session.
The testimony came during a pivotal trial where District Judge Amit Mehta will determine remedies for Google’s previously ruled illegal search monopoly. The case, ongoing since 2020, has exposed Google’s practice of paying Apple tens of billions of dollars annually to remain the default search engine on Safari browsers and Apple smartphones. Investors were further unsettled when Cue suggested Apple might soon offer AI alternatives as default search options on its devices, heightening concerns that Google’s advertising revenue could face serious threats from AI competitors.
With the three-week trial set to conclude Friday, government attorneys are pushing Judge Mehta to order Google to divest its Chrome browser. They argue that AI technologies will only strengthen Google’s dominance by leveraging its vast data resources across products like Maps, YouTube, and Chrome to stifle competition. However, Cue’s testimony bolstered Google’s defense that AI is already disrupting its search dominance, with chatbots now posing legitimate threats to its business model.
When Judge Mehta issues his ruling in August, he could end Google’s default search agreements with Apple and others — a prospect that Cue told the court he was “losing sleep” over, with potential revenue losses impacting Apple’s product development and operating system investment. Alternatively, Mehta might order Google to share its search data with competitors, which CEO Sundar Pichai warned would effectively amount to a “de facto divestiture of search.”
As a counter-offer, Google proposes a more limited remedy that would allow it to continue paying for default placement of its search engine, but with annual renegotiations and greater freedom for smartphone manufacturers to choose which Google apps to install on their devices.
The Google case represents just one of five major tech antitrust actions currently pursued by the US government, with Meta facing similar scrutiny in the same courthouse. Google recently lost a separate case regarding its ad technology business and may face additional divestitures, while Apple and Amazon are also expected to confront antitrust challenges in US courts.
© 2024 AFP
