Apple has most of the elements it needs to create its own search engine
Apple could make its own search engine and end its reliance on Google, a report points out, with Apple already possessing most of the components it needs to go it alone.
Using Google for search has been lucrative for Apple, with the search giant paying Apple billions to be the top search option in iOS. But while the arrangement being discussed in court is beneficial to Apple, there's always a possibility of it deciding to go its own way.
In Sunday's "Power On" newsletter for Bloomberg, Mark Gurman reasons that Apple could create its own search engine and create an Apple Watch-sized revenue stream with the sale of advertising. One that is a "long shot" from actually happening due to how the incentives of the Apple-Google deal line up, despite repeated rumors on the topic.
A person involved with the deal explained that the alignment of incentives was a big part of its creation, since while Apple could promote rival searches, it at least earns by steering customers to Google.
However, Apple could earn more revenue than the Google deal by bringing search in-house. This possibility has helped Apple push to work on its own search technology, which helps on-device services but not web search.
Going it alone
In the what-if scenario, Gurman proposes Apple could offer a more integrated and private solution than Google. This is already evident in search engines made for services like the App Store and Maps.
Apple has also been working on a next-gen search engine for apps codenamed "Pegasus" under former Google executive John Giannandrea over the last few years. That will apparently arrive on apps like the App Store soon, offering more accurate search results.
Another piece of evidence is Spotlight, which does rely on Bing and Google for search results, which may get more improvements through generative AI tools.
The Applebot web crawler is also an important element, since it scours the Internet for websites similar to Microsoft and Google's versions. Then there's the advertising technology team that could eventually create an advertising group for web search.
It is reasoned that comments from Apple SVP of Services Eddy Cue saying Google's search is the best and that Apple has no incentive to make its own are probably true, but could also be a measure to try and protect Google from government enforcement. If the US believes Google violated antitrust laws, the existing billion-dollar search deal could go up in smoke.
Google therefore remains Apple's best option, at least until Apple believes it has made a better one.
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Comments
For every search you made through Google, Google was earning revenues by just presenting the results page to you with two or three clearly marked promoted links. You didn't have to click on any of them for Google to get the revenue. That remains of course but a lot more has been added and interwoven into it since.
At the very least, Apple now has enough users to make regular search a viable and very profitable option. That would earn them revenue, increase competition and potentially take customers away from Google.
Of course, it's no wonder Google got where it got today because it's search infrastructure, algorithms included, is class leading.
However, you don't have to beat Google at its own game. You just have to be good enough and know how to market the functionality.
IMO, the current Apple - Google 'agreement' is basically a scheme to stifle competition and share the rewards.
So, that would be 21% of Google’s total search revenue. Seems low but not outlandish. I bet it is closer to 30-35% and growing every year
Apple continuing to build internal expertise and launch internally build search features is key to having leverage over Google in negotiations. It is fundamental
You're not changing a market when the market is already mature and well-served.
Do I wish there was an opportunity for Apple to compete with Google? Absolutely! I just can't see it happening.
id rather just pull in the $15-20 billion a year.
No good.
So, if we count ourselves lucky, LLM services providers will be able to get 100+ million subscribers at $100 per year rates, they may have enough revenue and profit to have factual no-nonsense results. If they don't, get ready for ads embedded from LLM chatbots. It's going to be even worse than the ads you see today from various companies after entering a search.
Since it may be in text form with "footnotes" indicating this or that is an ad, it's not going to take much to influence readers from going out and buying some fast food when you just was checking to see if their was a sale on vegetables at the local supermarket.
Who are we talking about here? It's rich techbros, who are morally and ethically reprehensible, that are building these things. So, you basically have to imagine the worst possible outcome for LLM chatbot services, than go even beyond that worst possible outcome.
I'm not sure why Apple would need to generate more revenue than the current deal gets them. Money is not the sole objective in this scenario (at least initially).
Taking a slice of the pie away from Google would reduce its own revenues and level the playing field to a degree.
It would also put the spotlight on the current multi billion dollar deal.
Would Google still be willing to pay Apple to be the default option on Apple devices with Apple offering its own search engine?
It would be reasonable to suppose (just like with Maps) that any Apple offering would need a few years of development to fully get going so Google would still be the best (again, at least initially).
Obviously, the 10 or 20 billion dollars (or whatever in between number it may be) they currently hand over to Apple is still profitable for them so that alone, probably indicates how important that situation is to then.
But now let's open things up a bit. Let's imagine Apple cancels the default search engine deal with Google. Let's imagine they provide their own and it's decent enough to gain traction. Now let's imagine Apple decides to open its engine up to a worldwide audience via web and app.
Now, that would be a completely different story and, as a revenue driver, the question would be, why wouldn't they do that?
After all, when Huawei lost access to GMS it is exactly what they did, via Petal Search. The precedent is there, although at least part of it seems to have moved into bed with Bing this year (perhaps a deal similar to the Google Apple one).
Regulators would then have Apple in the Spotlight, yet again, for adding a piece to their ecosystem which makes Apple that much more sticky.
The remedy to that would be to attempt to "level the playing field", one of your favorite mantras. The potential increase in revenue doesn't justify going down that path.
So, pray tell, why hasn't the EU invested in a competitor to Google search, being the haven for innovation and all that?
As things stand, Apple does not enjoy a dominant position in search.
That said, does the current deal put both companies on thin ice? IMO, yes.
It could be interpreted that the deal is collusion to NOT compete.
How would Apple search make a system more 'sticky' in terms of lock in?
The answer: it wouldn't.
Much less if 'Apple Search' were opened up via web/app to all platforms.
The EU does want to level the playing field. It does want competition and Google Search is already being investigated.
With the status quo they get to remain the company of privacy first for their customers while making a huge chunk of money from Google for rent-seeking.