Google's 'Golden Goose' Under Threat As GenAI Surges And Apple Rethinks Search Ties, Warns Gene Munster

According to a leading fund manager and venture capitalist, Google-parent Alphabet Inc.’s GOOGL GOOG search dominance is facing mounting challenges, with a high-profile antitrust lawsuit, and emerging technologies that are reshaping consumer behaviours.

What Happened: On Thursday, Gene Munster, the managing partner at Deepwater Asset Management, appeared on CNBC’s Fast Money to discuss the challenges currently facing the search giant.

Munster notes the rapid acceleration in OpenAI’s ChatGPT, “It took 10 months to go from 1 to 200 million users, then just six months to reach 400 million,” he says, “It's on track to hit 800 million by June,” warning of a seismic change in how users search for information online.

This shift, Munster says, creates a difficult scenario for Google, as it will struggle with traditional monetization options if it has to keep up with GenAI competitors.

“The golden goose is showing its age,” he says, while citing Apple Inc.’s AAPL Senior Vice President of Services, Eddie Cue, who recently said under oath during the United States Department of Justice hearing that search usage within Apple’s Safari browser has declined for the first time. “That caught my attention,” Munster said, as “Safari accounts for about half of browser use on iPhones.”

This comes amid the DOJ turning up the heat on Apple’s $20 billion a year deal with Google, which involves making it the default search engine on the iPhone.

Drawing parallels with Google, Munster gives the example of Redbox, the movie rental service that once disrupted Blockbuster, but eventually faded into oblivion. “I thought Redbox would be over before it started, but it took 10 years to wind down,” he said. “The pace of change [with Google] is faster than I expected,” he adds.

At the end of the day, Munster says, the central question is “how [Google is] going to create a product that people want, that still allows them to monetize.”

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Why It Matters: News that Apple may be reconsidering its long-standing partnership with Google in favor of an AI-powered search alternative prompted a pullback in Alphabet shares this week.

Aravind Srinivas, CEO of Perplexity AI, weighed in on Alphabet's stock decline with a post on X, stating, “AI is eating search.” His comment comes as Perplexity positions itself as a leading contender in the rapidly evolving search landscape.

Price Action: Alphabet shares were up 1.93% on Thursday and 0.48% after hours.

Despite scoring well on growth and quality, the stock is sports an unfavorable price trend in the short, medium and long term according to Benzinga Edge Stock Rankings. For more insights, sign up for Benzinga Edge.

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