Market Data 
Is Google screwed?
That’s the $2 trillion question the tech world is trying to understand, following yesterday’s blockbuster news: A top Apple executive said search queries on Google’s Safari browser were declining because people were using AI engines like ChatGPT instead.
Investors immediately acted as if Google’s astonishing run at the top of the tech heap was over, and slashed the company’s stock by more than 8%.
But a day later, Google’s stock is climbing back up a bit, and there’s a healthy debate about what Cue’s statement means — as well as why he said it.
Spoiler: I’m not going to solve this one today. But let’s at least look at the argument.
The most obvious way to view Cue’s comments was the way Wall Street did: That Google search dominance was being eroded by AI competitors.
After all, fear of being usurped by AI is what pushed Google to fast-track its own AI efforts, even when some of those efforts created embarrassing results.
But later on Wednesday, Google put out a statement that basically said Cue was wrong, without actually saying that out loud. Instead, the company said it was continuing to see increasing searches, and “that includes an increase in total queries coming from Apple’s devices and platforms.”
So that looks like two of the world’s most powerful and valuable companies are disagreeing over basic, knowable facts.
But people who pay attention to this stuff are focusing on three key words in Google’s statement: “total,” “devices,” and “platforms.” And the absence of another word: “Safari.”
And that’s leading them to translate Google’s statement this way: “Maybe Apple really is seeing fewer searches on Safari, the default web browser on iPhones. But you can use Google in other ways on iPhones — namely, via the Google app, but also via Google’s own Chrome browser. And people are using those more — enough to counter any decline elsewhere.”
Assuming that this translation is accurate, that should reassure Google and its boosters a bit, though not completely: Cue said the searches on Safari were down for the first time ever, and that’s not the kind of signal you can just wave away.
And even if Google Safari searchers are really moving to things like the Google App instead, that also underlines the fact that people who used to just type something into their iPhone browser know now they can get results other ways. And there’s no reason they couldn’t also be searching Google competitors like ChatGPT.
A Google rep declined to comment; Apple hasn’t responded to my request for comment.
Google investors, by the way, don’t seem 100% convinced by Google’s statement: The stock is up 3% on Thursday, which means Google is still worth 5% less than it was Wednesday morning, when Cue started testifying in the US vs. Google antitrust trial.
Which brings us to the second question Google and Apple watchers are speculating about: Why did Cue say what he said in court, after all?
I’m an Occam’s Razor guy, so my first take was that Cue answered the questions he was asked in court.
But there’s also a 4D chess argument, put forth by folks like MoffettNathanson analyst Michael Nathanson. It goes like this: Cue has an incentive to portray Google as a wounded animal.
That’s because Google pays Apple at least $20 billion a year to make Google the default search engine on Safari (that’s the reason Cue has insight into Google’s search activity), and a federal judge has already declared that Google has an illegal monopoly in search.
And one of the remedies the judge could push for would be to prevent Google from paying Apple for that valuable real estate — which would mean Apple could lose all of that high-margin revenue.
So, the theory goes, convincing the judge that Apple no longer has a stranglehold on search, because of AI competition, might allow those payments to keep flowing after all.
That theory also helps explain Google’s muted response on Wednesday night, where the company tried to walk the line between tooting its own horn (which bucks up investors but could damage its legal argument) and acknowledging that they have real competition (which could help Google in court but hurt it in the market).
Which brings us back to where we started: Is Google really starting to lose out to the ChatGPTs of the world, and entering a permanent decline, just like pay TV networks a decade ago? Or is it holding its own despite the competition? Depending on where you’re asking the question, Google might give you a different answer.
