Will ai kill the iphone key highlights from apple’s eddy cue testimony in google antitrust remedies trial

Will ai kill the iphone key highlights from apple’s eddy cue testimony in google antitrust remedies trial

A senior Apple executive testified on Wednesday, May 7, that while generative AI-powered search engines have the potential to disrupt Google’s monopoly in search, existing AI search tools are currently not good enough.

Eddy Cue, the senior vice president of services at Apple, also said that the iPhone-maker is looking to integrate AI search options in its Safari browser, according to a report by The Verge. He took the witness stand during the trial in the Google Search antitrust remedies case on Wednesday. After his testimony, shares of Google’s parent company, Alphabet, dropped more than eight per cent.

Cue had also previously testified in the Justice Department’s trial against Google’s search monopoly in September 2023. In his testimony on Wednesday, he defended the deal between Apple and Google. As part of the deal, Google offers $20 billion annually in payments to Apple to be its default search engine on the Safari browser.

A US district court in Columbia, New York, US ruled that such agreements between Google and browser developers, smartphone makers, etc, aided the tech giant in maintaining its illegal monopoly of the online search market, Now, the same court is hearing arguments to determine the remedies that Google should undertake to correct its anti-competitive behaviour as well as the damages owed by the company.

While the US Department of Justice (DOJ) has argued that Google should be forced to sell off its Chrome browser and share valuable search data with competitors, Google has sought restrictions only on deals deemed as unfairly exclusionary in the court’s antitrust ruling.

On its browser agreements, Google suggested it would be willing to give browser developers like Apple more flexibility to sign additional default search agreements across its various devices or in private browsing mode. In the courtroom, Apple’s Eddy Cue also discussed how AI could potentially reshape the tech industry and pave the way for new entrants.

Here are the key highlights from his testimony.

The iPhone’s future

In a rather ominous warning, Cue said that the iPhone could become obsolete like the iPod in the next 10 years thanks to AI.

“Incumbents have a hard time … we’re not an oil company, we’re not toothpaste — these are things that are going to last forever … you may not need an iPhone 10 years from now,” he said. However, he said that Apple’s decision to discontinue the iPod was a bold move as it was akin to killing “the golden goose”. Currently, more than half of Apple’s revenue is made up of iPhone sales.

AI as a technological shift

According to Cue, AI is a huge technological shift with the potential to humble companies that were previously considered to be untouchable.

“When I got to Silicon Valley, all of the best companies, or the most successful companies, either don’t exist today or are significantly smaller and less impactful,” Cue said, referring to companies such as HP, Sun Microsystems, and Intel.

“We’re lucky, because honestly, if AI had not come about, I don’t know what you could do,” he said. “Until there are truly competitive products, people will keep using the best one,” Cue added.

AI as a threat to Google’s Search monopoly

Cue opined that while traditional search engines like Microsoft’s Bing or DuckDuckGo won’t disrupt Google’s dominance in search, well-funded generative AI upstarts pose a more serious threat to the tech giant’s search business.

However, he also said that existing AI search products are not yet good enough to replace traditional search engines. “There is much greater potential because there are new entrants that are attacking the problem in a different way,” he said.

According to Cue, LLM-based AI companies haven’t built a robust enough search index to substitute for Google yet. But he also acknowledged that combining an LLM with search could let them use a smaller index effectively soon.

Defending the Google-Apple deal

In a nutshell, Cue’s argument was that rapid AI advancements were shrinking the antitrust threat identified by the US district court in its ruling against Google.

For the first time in 22 years, Apple saw search volume decline in its Safari browser last month, Cue testified, stating that it was a side effect of users seeking more information from AI chatbots. Cue said it “seems crazy to me” that the court had found Google to have violated US law, yet Apple would end up losing money.

Google could even keep its prime Safari placement without a deal in the short term, Cue said. “We don’t really have a choice today,” he added. While Apple would be free to ink a default deal with another company, Cue said that it would not make a difference as Google is still the best service available for customers.

The prospect of Apple losing the Google deal could impact the Cupertino-based tech giant’s ability to make new products, he warned.

However, Cue also testified that he could not disagree with the court’s ruling which said that Apple had been disincentivized from building its own search engine because of its deal with Google. “We can’t do everything,” he said.