Google shares plunge after Apple executive’s court testimony

Shares in Google mum or dad Alphabet plunged greater than eight % on Wednesday after Apple govt Eddy Cue testified in federal court docket that Google’s search visitors on Apple gadgets declined final month for the primary time in over twenty years.

Cue, Apple’s senior vp of companies, advised the Washington antitrust trial that Google was shedding floor to AI alternate options like ChatGPT and Perplexity.

His revelation that this decline “has by no means occurred in 22 years” despatched shockwaves by Wall Road, wiping greater than $170 billion from Google’s market capitalization in a single buying and selling session.

The testimony got here throughout a pivotal trial the place District Decide Amit Mehta will decide treatments for Google’s beforehand dominated unlawful search monopoly.

The case, ongoing since 2020, has uncovered Google’s apply of paying Apple tens of billions {dollars} yearly to stay the default search engine on Safari browsers and Apple smartphones.

Traders have been additional unsettled when Cue instructed Apple would possibly quickly supply AI alternate options as default search choices on its gadgets, heightening considerations that Google’s promoting income may face critical threats from AI rivals.

With the three-week trial set to conclude Friday, authorities attorneys are pushing Decide Mehta to order Google to divest its Chrome browser.

They argue that AI applied sciences will solely strengthen Google’s dominance by leveraging its huge information assets throughout merchandise like Maps, YouTube, and Chrome to stifle competitors.

Nevertheless, Cue’s testimony bolstered Google’s protection that AI is already disrupting its search dominance, with chatbots now posing reputable threats to its enterprise mannequin.

– ‘Dropping sleep’ –

When Decide Mehta points his ruling in August, he may finish Google’s default search agreements with Apple and others — a prospect that Cue advised the court docket he was “shedding sleep” over, with potential income losses impacting Apple’s product growth and working system funding.

Alternatively, Mehta would possibly order Google to share its search information with rivals, which CEO Sundar Pichai warned would successfully quantity to a “de facto divestiture of search.”

As a counter supply, Google proposes a extra restricted treatment that will enable it to proceed paying for default placement of its search engine, however with an annual renegotiations and better freedom for smartphone producers to decide on which Google apps to put in on their gadgets.

The Google case represents simply one among 5 main tech antitrust actions presently pursued by the US authorities, with Meta dealing with comparable scrutiny in the identical courthouse.