Alphabet shares fell more than 8% on Wednesday after Apple's senior vice president of services, Eddy Cue, disclosed that the iPhone maker is actively considering adding artificial intelligence-based search engines, including Perplexity, to Safari, potentially undermining Google's status as the browser's default search provider.

Cue's remarks came during testimony in the Department of Justice's antitrust case against Alphabet, which has accused the tech giant of maintaining an illegal monopoly through its search business. During the hearing, Cue confirmed that Apple is "actively looking at" new AI search partners and noted, "We will add them to the list - they probably won't be the default."

Apple currently receives an estimated $20 billion annually from Alphabet for maintaining Google as the default search engine in Safari. The partnership, a cornerstone of Apple's $96.1 billion Services division, is under scrutiny as AI startups such as Perplexity, OpenAI, and Anthropic gain traction in the search market.

Cue said that for the first time last month, Safari searches declined, attributing the drop to rising user interest in AI-powered alternatives. "Prior to AI, my feeling around this was, none of the others were valid choices," Cue testified. "I think today there is much greater potential because there are new entrants attacking the problem in a different way."

Apple already offers OpenAI's ChatGPT via Siri and is expected to add Google's Gemini AI search later this year. Cue noted that the company held a "bake-off" between ChatGPT and Gemini, but Apple ultimately rejected Google's proposed terms. Apple has also evaluated other AI tools from DeepSeek, Anthropic, Grok, and Perplexity.

Despite the explorations, Cue indicated Apple intends to maintain its agreement with Google for now. He acknowledged that "AI is a new technology shift, and it's creating new opportunities for new entrants."

Bloomberg first reported Cue's comments, which shook investor confidence in Alphabet and raised further questions about the long-term viability of its search dominance. Microsoft's AI-powered Copilot and Google's own Gemini platform are also vying for user adoption as search behaviors evolve toward conversational interfaces.

As user interest in AI search accelerates, Apple is attempting to keep pace by embedding generative models into its platforms through Apple Intelligence. Cue said future devices may not even need a smartphone interface. "You may not need an iPhone 10 years from now as crazy as it sounds," he said.

Cue also acknowledged that current AI search products need to improve their indexing to compete with traditional engines but said user demand and investment are likely to close that gap. "There's enough money now, enough large players, that I don't see how it doesn't happen," he said.