Apple executives say iPhone manufacturers are "viewing" introducing alternative search engines for their web browsers, powered by artificial intelligence, so stocks in Google's parent alphabet fell as much as 9%.
Eddy Cue, senior vice president of Apple Services, told the U.S. court that the company is talking to AI startups, such as making them offer search tools as an alternative to Google.
Cue said Apple plans to set iPhone and iPad owners the option to set it to search the network through its Safari browser for the preferred option "add them to the list" without giving a time range of potential moves.
He said Apple is also considering adding China's AI services to iPhone from China's DeepSeek.
The shift to new search providers will threaten a multi-billion dollar relationship with Apple's letters, according to which Google is the default search engine for iPhone and Safari browsers. The deal brought hundreds of millions of users of Google and improved its advertising business.
In afternoon trading in New York, letters stocks fell nearly 8%, while Apple fell nearly 2%. Shares fell after Bloomberg reported Cue's comments earlier.
After the Justice Department's legal victory over Google last year, CUE testified as part of a hearing to determine antitrust remedies. A federal judge ruled last August that Google maintained an illegal monopoly through deals with wireless carriers, browser developers and device manufacturers.
If the deal with Google is cancelled due to the ruling, Apple will make billions of dollars in profits.
Google pays Apple up to $2 billion a year as its default search engine. A long-term agreement between the two Silicon Valley companies is at the heart of the U.S. government case.
Apple has introduced several new generation AI tools to iPhones over the past year, including Chatgpt to access OpenAI through its Siri Assistant. But other features, including a wider upgrade to Siri, have also been postponed, raising concerns among some investors that Apple is lagging behind rivals like Google, Amazon and Microsoft in the Generative AI game.
AI tools provide users with written answers to search queries and support them by supporting links instead of Google's traditional web page lists. Google has also upgraded its search engine to generate AI merge results using it.
In Wednesday's testimony, Cue said that AI opened the door for Google's first search for fierce competition, with Apple discussing adding various AI features to iPhones from a range of new providers, including Confused, Human, China's Deepseek and Elon Musk's Xai.