Generative AI Disrupts the Advertising Model: Structural Risks Looming Over Google's Revenue Myth

In 2025, the technology industry was shaken. Reports that Apple is exploring the introduction of an "AI search engine" to replace the traditional Google search in Safari caused a significant drop in the stock price of Alphabet (Google's parent company). This news suggests not just a change in search engine options, but that the very domain of "search" has entered a phase of redefinition by Large Language Models (LLMs).

In this article, we will explain from a professional perspective the background behind the cracking of the honeymoon relationship between Apple and Google, the paradigm shift caused by the rise of AI search, and the future outlook for the search market.

1. The End of the Nearly 20-Year "Search Alliance" Between Apple and Google?

1-1. A 2 Trillion Yen Annual Partnership

For many years, Apple and Google have built a close business relationship through the default setting of Google Search in Safari. According to the U.S. Department of Justice, this amount reaches approximately $20 billion (about 2.9 trillion yen) annually. This is a crucial revenue source, accounting for about 20% of Apple's "Services" segment revenue ($96.1 billion as of 2024).

Eddy Cue, Apple's Senior Vice President of Services, stated the following in his testimony:

1-2. An Unusual Situation: A Decline in Search Volume

What is noteworthy is the fact that the number of Google Search uses in Safari declined for the first time in April 2025. Apple analyzes this as being "due to the increase in the use of generative AI search."

This is not just a temporary fluctuation in traffic, but a sign that a "qualitative shift in search behavior" has begun.

2. The Rising AI Search Forces: ChatGPT, Perplexity, and Anthropic

2-1. Trends in ChatGPT and Perplexity

Apple is already collaborating with OpenAI (the provider of ChatGPT) and has introduced generative AI as part of a brand called "Apple Intelligence." It is also said to be in contact with Perplexity (an AI-based emerging search company).

These AI searches do not provide the traditional "10 blue links" type of search, but rather offer a "conversational search experience" that interprets user intent and presents summaries, interpretations, and suggestions all at once.

2-2. Google's Impatience and Playing Catch-up

Google is naturally aware of this threat and is deploying multiple AI search services in parallel, such as "Bard" (later renamed to Gemini), "AI Overview," and "AI Mode." However, the "first-mover advantage" of ChatGPT remains strong, and the reality is that they are being pressured by the momentum of emerging forces.

3. The Paradigm Shift in Search: Generative AI Changes the "Pursuit of Knowledge"

3-1. From "Searching" to "Receiving Answers"

The traditional search experience was exploratory, involving "entering keywords -> clicking links -> reading information." In contrast, AI search is shifting to "conversational navigation," where you "convey intent -> receive an answer."

With this change, users are not only able to obtain information efficiently but have also come to entrust AI with organizing their thoughts and supporting their decision-making.

3-2. Impact on the Advertising Business Model

Google Search has long centered its business on advertising revenue. However, with AI search, the 'placement for advertisements' becomes unclear. There is no room to insert multiple ads into a single AI-generated summary response.

This structural change could deal a blow to Google's long-term revenue model.

4. Apple's Strategy: 'Search Redefinition' Driven by Privacy and UI

It is expected that Apple will differentiate itself in the introduction of AI search along the following two axes.

4-1. Privacy-Focused Local AI Processing

Apple advocates for 'on-device processing' and 'privacy-first,' aiming to realize user data protection by processing some AI search functions within the device itself.

4-2. Integration with the iOS Ecosystem

By integrating Siri, Spotlight search, Safari, and messaging apps, it is possible to naturally incorporate the AI search experience as an 'extension of the UI.' In other words, it is a future where 'AI search' becomes 'part of the OS' rather than an 'app.'

5. Future Outlook: The Future of Search and the Fate of Platformers

Within the next five years, the search market may undergo the following structural changes.

• Standardization of AI search: A hybrid experience of traditional search and AI search becomes mainstream

• Collapse of monopoly: Google's search market share gradually declines

• Shift in platformer competition axes: 'User experience' and 'generative capabilities' become the differentiating factors rather than advertising

While a 'structural risk' that Google has never experienced before is emerging, Apple is aiming for a new hegemony as the 'gateway to knowledge' in the AI era.

Apple's consideration of introducing AI search to Safari is not merely a matter of selecting a search engine. It is the 'starting gun' that signals the end of Google's monopolistic position and signifies the arrival of an era where AI is reconstructing the very definition of 'search.'

For users, the transition from the conventional 'search to find' to 'search to be guided' has begun. The battle between Apple and Google from here on out will be one that tackles the question of what search is head-on.

Related Articles