Apple is perhaps the only company with the size and resources to compete with Google. So there’s even more incentive for Apple to dominate Google, so what’s the problem? Google continues to dominate the search engine industry, but that may change in the future. Photographer: Reuters Google continues to dominate the search engine industry, but that could change in the future. Photographer: Reuters It’s time for Apple Inc. to ditch its easy money habit and focus on a bigger prize: building its own search engine. For years, the smartphone maker has reaped the financial rewards of a lucrative partnership in which Alphabet Inc.’s Google paid Apple billions of dollars to be the default search engine on iOS devices.
In fact, distribution payments were a centerpiece of last October’s Justice Department antitrust lawsuit against Google, for good reason. This makes it nearly impossible for a small startup to gain a foothold in the market where Google holds a monopoly-like hold. According to StatCounter, the internet giant owns 92% of the global search engine industry. And with the payments only skyrocketing, I don’t see how this blatantly anti-competitive practice can hold up in court. But the end of the partnership can turn out to be a blessing. Search is one of the few big tech markets that can shake things up for a multi-trillion dollar company like Apple.
However, the arrangement is unlikely to survive in a world of increasing antitrust scrutiny. That’s why Apple should proactively preempt any risk and come up with its own offer. The move would help appease regulators, but would also be smart for its core business. The numbers in the Google search deal are getting too blatant. Last week, Bernstein raised eyebrows as he updated his latest projections on the deal. The firm estimated that Apple would receive $15 billion from Google this year, increasing to $20 billion next year.
Bernstein claims that Google generates over $50 billion in revenue from iOS customers. So why not cut out the middleman and get a bigger slice of the pie? With an active iPhone user base of over a billion and a strong balance sheet, Apple is perhaps the only company that has the scale and resources to be a viable rival to Google. The market could definitely use more players. While Amazon.com Inc. has made progress in monetizing product search results, its efforts remain primarily focused on online shopping advertisements. The general search industry hasn’t seen much competition or innovation over the past decade. According to StatCounter, the internet giant owns 92% of the global search engine industry. And with the payments only skyrocketing, I don’t see how this blatantly anti-competitive practice can hold up in court.
More importantly, investing heavily in search capabilities can make Apple’s core products more appealing. Unlike its car initiative, the engineering required is similar to the mobile software and cloud services Apple already does. Because it’s an adjacent field, any expertise gained can enhance its technological capabilities elsewhere – from artificial intelligence to voice recognition – making owning an iPhone or iPad a better experience. Of course, it won’t be easy to beat Google. But with the dual benefits of potentially adding tens of billions in revenue and the prospect of improving the grip of its core products, Apple should definitely give it a try. While most comments will be published if they are on topic and not abusive, moderation decisions are subjective. Comments posted are the opinions of readers and The Business Standard does not endorse any reader comments.
Here’s another positive: Apple would become more intellectually honest about its privacy credentials. CEO Tim Cook has repeatedly criticized digital advertisers for their lack of transparency over their operating practices – including tracking activity behavior and acquiring vast amounts of users’ personal data – while touting the how his company prioritizes privacy. It’s hypocritical when Apple takes money from Google, which is known for some of the same things that Cook criticized. By creating a search engine with better privacy protections, Apple can truly live up to its principles.
Summary of news:
- Apple should abandon Google to develop its own search engine
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