Google isn’t sure where to look for answers

It’s a bad week for Google. The California-based tech giant has found itself in a precarious situation — between Apple formulating plans to reshape their native Safari browser to prioritize AI-powered search engines, Perplexity AI quickly climbing up the search engine rank, and bns of USD worth of lawsuits piling up, it seems Google’s dominance is quickly coming into question.

Do mind the competition: According to CNBC, Perplexity is in “late-stage talks” to raise USD 500 mn at a USD 14 bn valuation — up from USD 9 bn in November 2024 — in a funding round led by venture capital firm Accel. Perplexity is betting big on AI-powered web browsers, and they’re not alone. In 4Q 2024, OpenAI launched a search feature within ChatGPT. Earlier this year in March, Anthropic followed by introducing search engine functionality within its chatbot, Claude.

Perplexity’s speedy ascent could mean bad news for Google. Though Google was indeed quick to introduce AI overviews into its search results in 2Q 2024, users were quick to point out fatal mistakes made by the search engines, such as claiming that former US President Barack Obama was Muslim, and suggesting the use of non-toxic glue to make cheese “stick” to pizza. On the flip side, Perplexity users report receiving real-time, accurate information from reputable journals with direct citations from the AI-powered search engine.

What does this shift towards AI search mean for the search engine? Earlier in May, Apple executive and Senior VP Eddy Cue claimed that Safari searches fell for the first time ever in April 2024, a drop he attributed to the rising number of users utilizing AI search engines, according to Reuters. Bloomberg reports that Apple is currently exploring a complete redesign of their Safari web browsers in a move that would see them shift towards AI-powered search — and in doing so, away from Google, which pays approximately USD 20 bn annually for the privilege of being the default search engine on Safari.

Google is in denial. Following Cue’s statement, Google was quick to issue a response: “We continue to see overall query growth in Search. That includes an increase in total queries coming from Apple’s devices and platforms.”

Nothing’s quiet on Google’s western front this week. Losing the AI race isn’t the only concern Google has right now. Reuters reports that Google is set to pay USD 50 mn to settle a class-action lawsuit filed by a former employee accusing the tech giant of racial bias against black employees. Google is also facing over EUR 12 bn worth in damage claims from several price comparison websites throughout the EU, Bloomberg reports.