I thought it was universally understood that Apple has been working toward ending its dependency on Google Search for about a decade.
One can witness the firepower of Apple's fully armed and operational search engine today, which is hidden in plain sight: https://imgur.com/a/SThluBm.
That said, Apple should not end its Google Search partnership until one of the following occurs: (1) it's strategically important for Apple to provide Safari's default search engine, (2) a government mandates that Google can no longer pay (or pay Apple) for the privilege of being Safari's default search engine, or (3) people stop preferring Google search by a wide margin.
(1) Making Apple Search the default for Safari would cost Apple $20 million per year, but could open up a bunch of new revenue streams and potentially provide a much better search experience for Apple users (especially if Apple's GPT partner isn't Google).
(2) If the EU mandates that Google can no longer pay-to-play in general, or can't do so with Apple in particular, no problem. Users will choose their search engine on a platform where Apple has a home-field advantage.
(3) In the extremely unlikely event that Google goes from hero to zero in search, boom — Apple Search is ready.
In summary, this is a terrible time for Apple to stop taking Google's money. They should wait until the GenAI players settle down, until the advertising part of the business matures and can capitalize on the change, and until governments stop looking for limbs to chop off.
> Making Apple Search the default for Safari would cost Apple $20 million per year, but could open up a bunch of new revenue streams
You mean, it would change Apple's incentives to those of Googles. The customer no longer being the customer but rather who's ever paying these new revenue streams.
They don’t ever include monetizable search results though, anything that would generate ad revenue goes off to google since the deal they have isn’t a flate rate, it’s a revenue split.
Apple knows enough to not use their search engine in place of anything with actual ad dollars attached to it.
"Apple Maps, launched in 2012, initially faced several hiccups and criticisms, but today, it arguably matches or exceeds Google Maps in many areas." - not in my experience.
Also, concerning the "partnership", it is impossible to configure Google Maps on iOS as a default map handling application. Due to EU legislation Apple must change this (in the EU only) but this is supposed to happen in iOS 18 or something (in 2025).
Apple Maps is fairly good in the US. Not in Europe, it sent me to the wrong place a couple of times.
However, directions on Google Maps has been corrupted by Waze - it tends to save you a tiny bonus of time by sending you in weird paths or simply cheating (using the exit lane on a cloverleaf to bypass traffic). Super frustrating and panic inducing if you aren't familiar with the area.
What is the alternative here? The default search position is very valuable. If Google didn't pay for it, someone else would. Should Apple auction it off but disallow Google from winning it? That seems maybe OK I guess?
Should Apple take it for itself and build a search engine? Ironically, this seems like it would make Apple guilty of exactly what many antitrust arguments decry at the moment: a company leveraging its position in one area to give itself a boost in another.
I feel Tim Cook is going down the same rabbit hole as Steve Ballmer, chasing ways to juice the iPhone/iOS cash cow. And now with dividends, it's an aim at spiking the stock price while revenue isn't growing much.
A $15B dip on Apple's earnings would shock their price. Apple seems to have fallen into the trap of chasing quarterly earnings while sacrificing their long term growth.
They found a way to launder the sale of their users' data through this deal so they can make billions and most people don't even realize they've been sold. I doubt they'll just give it up.
Last week, as part of the US Department of Justice investigation, documents were released that showed Google paid Apple $20 billion in 2022 to retain the search partnership.
This is almost 20% of Apple’s total operating profit for the year.
It’s never a good idea for a company to be so reliant on a single partnership or client.
It distorts incentives, is high risk and sometimes, as in Apple’s case leaves a company blind to other opportunities it could be pursuing.
On top of it all, Apple’s search partnership with Google trades their customer’s privacy for search $ kickbacks.
Based upon all this, it should be time for Apple to end this partnership and pursue their own search solution.
Search is a hard problem, and if they haven't decided to cut the $20 billion, it's because they believe Google is the best.
I do think Google has been decreasing in quality over the years, but when I use any of the privacy focused alternatives like DuckDuckGo, Brave or Kagi, I end up using a !g bang every 2/3 searches.
The others just aren't there yet, and they know that.
Google didn't give Apple 20% of their revenue for the year, they were responsible for 20% of their profit. AAPL is $2.8T and their P/E is 28. They earn about $100B a year. And if I'm recalling their profit/revenue ratio correctly, that's $100B on about 400B in revenue. Making Google's money 5%, not 20%.
CharlesW|1 year ago
One can witness the firepower of Apple's fully armed and operational search engine today, which is hidden in plain sight: https://imgur.com/a/SThluBm.
That said, Apple should not end its Google Search partnership until one of the following occurs: (1) it's strategically important for Apple to provide Safari's default search engine, (2) a government mandates that Google can no longer pay (or pay Apple) for the privilege of being Safari's default search engine, or (3) people stop preferring Google search by a wide margin.
(1) Making Apple Search the default for Safari would cost Apple $20 million per year, but could open up a bunch of new revenue streams and potentially provide a much better search experience for Apple users (especially if Apple's GPT partner isn't Google).
(2) If the EU mandates that Google can no longer pay-to-play in general, or can't do so with Apple in particular, no problem. Users will choose their search engine on a platform where Apple has a home-field advantage.
(3) In the extremely unlikely event that Google goes from hero to zero in search, boom — Apple Search is ready.
In summary, this is a terrible time for Apple to stop taking Google's money. They should wait until the GenAI players settle down, until the advertising part of the business matures and can capitalize on the change, and until governments stop looking for limbs to chop off.
manquer|1 year ago
$20B is a 1/6th of their operating margin for very little effort.
[1] this was revealed in the recent anti trust trial
nox101|1 year ago
You mean, it would change Apple's incentives to those of Googles. The customer no longer being the customer but rather who's ever paying these new revenue streams.
hehdhdjehehegwv|1 year ago
Apple knows enough to not use their search engine in place of anything with actual ad dollars attached to it.
RandallBrown|1 year ago
ofrzeta|1 year ago
Also, concerning the "partnership", it is impossible to configure Google Maps on iOS as a default map handling application. Due to EU legislation Apple must change this (in the EU only) but this is supposed to happen in iOS 18 or something (in 2025).
r00fus|1 year ago
However, directions on Google Maps has been corrupted by Waze - it tends to save you a tiny bonus of time by sending you in weird paths or simply cheating (using the exit lane on a cloverleaf to bypass traffic). Super frustrating and panic inducing if you aren't familiar with the area.
creato|1 year ago
Should Apple take it for itself and build a search engine? Ironically, this seems like it would make Apple guilty of exactly what many antitrust arguments decry at the moment: a company leveraging its position in one area to give itself a boost in another.
nojvek|1 year ago
I feel Tim Cook is going down the same rabbit hole as Steve Ballmer, chasing ways to juice the iPhone/iOS cash cow. And now with dividends, it's an aim at spiking the stock price while revenue isn't growing much.
A $15B dip on Apple's earnings would shock their price. Apple seems to have fallen into the trap of chasing quarterly earnings while sacrificing their long term growth.
unknown|1 year ago
[deleted]
add-sub-mul-div|1 year ago
pipeline_peak|1 year ago
matt-attack|1 year ago
If Apple changed the default search engine all these people you know would instantly just starting using something new.
cushpush|1 year ago
happybuy|1 year ago
This is almost 20% of Apple’s total operating profit for the year.
It’s never a good idea for a company to be so reliant on a single partnership or client.
It distorts incentives, is high risk and sometimes, as in Apple’s case leaves a company blind to other opportunities it could be pursuing.
On top of it all, Apple’s search partnership with Google trades their customer’s privacy for search $ kickbacks.
Based upon all this, it should be time for Apple to end this partnership and pursue their own search solution.
Daedren|1 year ago
I do think Google has been decreasing in quality over the years, but when I use any of the privacy focused alternatives like DuckDuckGo, Brave or Kagi, I end up using a !g bang every 2/3 searches.
The others just aren't there yet, and they know that.
hinkley|1 year ago
That's still a lot for a default URL.