Earlier this week, a federal court ruled that Google’s lucrative default search engine deal with Apple violates antitrust law. Google, not one to back down, plans to appeal the decision. But what does this mean for Apple? Could this be the push Apple needs to enter the search market? Let’s break it down.
It’s August 11, 2024, and you’re listening to The Tech Pulse!
For years, Google has paid Apple billions to be the primary search engine on iPhones, iPads, and Macs.
In 2022 alone, Google shelled out $20 billion for this privilege. That’s about 36% of the total revenue Google earns from Safari searches. It’s a win-win: Apple gets a hefty payout, and Google gets massive reach thanks to Apple’s vast user base.
In its ruling, the court suggested that Apple has the ‘financial, technological, and human resources’ to develop its own search engine but has chosen not to because of the lucrative deal with Google. The court noted that these payments keep Apple ‘on the sidelines of search,’ essentially incentivizing Apple to not develop a competing product.
So, if Apple’s deal with Google goes away, will Apple dive into the search engine market?
There have been rumors for years. Back in November 2022, The Information reported that Apple had been working on a web search engine since 2022. However, it was still at least four years away from launching. Apple could be using this development as leverage during negotiations with Google.
Apple already has a dedicated search team working on robust search tools for Spotlight, Siri Suggestions, and content provided by Siri. It’s possible that Apple could spin some of this technology into a full-fledged web search engine in the future, especially with advancements in AI and the changes coming to Siri in 2024 and 2025. Imagine using Siri or Spotlight for all your search needs – would it be better than using Google Search or ChatGPT?
But let’s not forget the alternatives.
During the antitrust case, it was revealed that Microsoft had tried for years to get Apple to switch to Bing as the default search engine on Safari. Microsoft even offered to share 100% of Bing’s revenue with Apple! Yet, Apple declined, citing Bing’s ‘inferior quality’ and the ‘business risk of making a change.’
Apple also considered DuckDuckGo, especially for private browsing mode, but ultimately decided it wasn’t good enough. Eddy Cue, Apple’s services chief, testified that there was ‘no price that Microsoft could ever offer to make the switch’ from Google, emphasizing that Google was always seen as the best option.
With the antitrust ruling, Google might be prohibited from paying to be the default search engine on Safari.
This would remove Apple’s financial incentive to prioritize Google. In Europe, the Digital Markets Act already requires Apple to allow users to select a default browser during device setup. The U.S. court could mandate a similar process for search engines, allowing users to choose their preferred search engine when they first set up their device.
Now, Google is appealing the court’s decision, so the deal between Apple and Google isn’t in immediate danger.
The legal battles will likely continue for some time. However, if the courts and the Justice Department are correct that Apple’s deal with Google is holding back its own search engine development, this could be the catalyst Apple needs to create its own search product.
Analysts like Gadjo Sevilla at Emarketer see this as both a setback and an opportunity for Apple. Without Google’s revenue, Apple might finally build its own search engine, leveraging its robust AI capabilities and existing search technologies.
However, this won’t be cheap. Apple’s projections estimate a loss of over $12 billion in revenue during the first five years post-Google separation, plus billions more to build and maintain a search engine.
So, there you have it. The Google antitrust ruling could push Apple into the search engine market, a move that’s been speculated for years. What do you think? Will Apple finally build its own search engine? Let us know in the comment below.
And that has been the Tech Pulse. Thanks for listening, and I will see you in the next one!