Google Has Been Disrupted! Now What?
The Apple vs. Google Drama: Is This THE Beginning of the End for Search Dominance?
In a development that has sent ripples through the tech and investment communities, Apple's Senior Vice President of Services, Eddy Cue, testified during the U.S. Department of Justice's antitrust trial against Google that searches conducted via Safari have declined for the first time in 22 years. Cue attributed this unprecedented dip to users increasingly turning to AI-powered tools like ChatGPT, Perplexity, and Anthropic's Claude for their information needs.
This revelation is particularly significant given the longstanding partnership between Apple and Google, wherein Google pays Apple an estimated $20 billion annually to remain the default search engine on Safari. The decline in Safari-based searches raises questions about the long-term future of this lucrative arrangement and whether AI-driven alternatives are beginning to erode Google's search dominance.
In the near term, according to Bloomberg reporting, Cue believes, “Google should remain the default in Safari, saying that he has lost sleep over the possibility of losing the revenue sharing from their agreement. He said Apple’s pact with Google today for regular search still has the most favorable financial terms [Google pays Apple ~$20B a year for default placement in Safari; almost 1/4th of Apple’s entire profit].”
In response to Cue's testimony, Alphabet's stock experienced a sharp decline, dropping over 7% and erasing more than $150 billion in market value.
In an unusual move, Google publicly countered the claims by stating that overall search queries continue to grow, including those from Apple devices. Notably, however, the company did not address the specific decline in Safari searches; make of this whatever you want ;-) …
The market's reaction was immediate and underscores the growing concern that AI technologies are not just supplementary tools but potential disruptors to traditional search engines.
As AI continues to evolve and integrate more deeply into user experiences, the question arises: Is Google's core search business facing a fundamental shift?
Here’s what I’ll explore in this post:
Whether the recent Apple–Safari news is the first REAL sign that Google has been disrupted
Why not all search queries are equal – and which types are most at risk
How Alphabet’s broader business outside of Search (YouTube, Cloud, Subscriptions) changes the narrative
A full sum-of-the-parts (SOTP) valuation to assess whether Alphabet stock is undervalued or fairly priced
And ultimately, what all of this means for investors trying to “skate where the puck is going”
Part 1: Has the Disruption Thesis Just Been Proven Right?
When you hear a tech CEO say “Google is dead,” it tends to grab your attention. Especially when it’s not a random Twitter hot take, but part of a serious internal company-wide memo.
In this case, the statement came from Micha Kaufman, CEO of Fiverr, whose leaked message to employees caused quite a stir.
His warning was blunt: “LLM and GenAI are the new basics […] your value will decrease before you know what hit you.” The subtext wasn’t just about evolving job roles – it was about the foundational changes reshaping the internet itself.
Now, I’m not in the business of hyperbole. As investors, we should always separate signal from noise. But I’d argue that this particular signal is hard to ignore – a pretty direct, maybe somewhat panicky, comment by a tech CEO.
AI Tools Are Replacing Search – And It’s Happening Already
When people talk about “Google being disrupted,” they often mean that users are starting to bypass traditional search engines in favor of AI-based tools like ChatGPT, Perplexity, or Claude. What was once a “search” use case is now becoming a “conversation” or “assistant” use case. Need a product recommendation? ChatGPT. Need a quick answer to a historical fact? ChatGPT. Want to brainstorm ideas or get a meal plan? ChatGPT. It’s not just a novelty anymore – it’s a behavior shift I can observe in my own Internet usage behavior.
The leaked Fiverr memo painted this exact picture and, I believe, highlights that my experience is not just anecdotal evidence. Kaufman wasn’t just calling for alarm – he was urging adaptation. He essentially laid out a roadmap for knowledge workers: if you’re not embedding AI into your workflow now, you’re already behind.
This shift also hits Google where it hurts most: high-value queries. AI tools excel at synthesis, creativity, and personalized recommendations – all of which are incredibly valuable in advertising and commerce (more on this further down below). And when a user skips Google entirely to ask ChatGPT which running shoes to buy – and build this habit over time –, that’s a revenue opportunity lost. Not only tomorrow. But also today.