Recently the Department of Justice, along with eleven state attorney generals, filed a civil suit against Google for violating antitrust laws. The goal is stop Google from creating and maintaining monopolies in search and search advertising markets which they claim Google does through the use of anticompetitive and exclusionary practices. In the light of this suit, many are left wondering what this means for the future of Google and search engines in general. Does this mean Apple will create their own search engine? While some suggest that Apple has a search engine with Siri, Siri actually aggregates data from both Google and Yelp.
From the iPhone home screen, users swipe right to start a search. In the search results Google results are generally displayed at the top followed by sites suggested by Siri. These links from Siri suggested sites then push users directly to the publisher sites bypassing Google. So, while Apple does not have its own search engine per se, it does give users search capabilities. However, there has been speculation over the years that an Apple branded search engine might be in the works. Over the last few years, Apple has made some strategic job postings and hirings that suggests they may be getting serious about building their own search engine. This includes hiring the former Google SVP of Engineering John Giannandrea to run Apple’s machine learning and AI group. Giannandrea took charge of Siri not long after his hire.
Google/Apple Search Deal
One possible consequence of the Google antitrust case is the end of the search deal that Google has with Apple. For those unfamiliar with it, the deal says that if Apple maintains Google as the default search engine for iPhone users, then Google pays Apple for advertising revenue annually. Estimates for this revenue range from $8 billion to $12 billion annually. In fact, according to some sources, this revenue makes up about 15-20% of Apple’s income worldwide.
If this deal were to come to an end, both companies stand to lose. However, the greater loss would actually fall on Apple’s side of the deal. The scenario may play out as follows: the antitrust case forces Google to break up its control of the market. The iPhone default search engine deal is dissolved. New iPhone users are now forced to choose a default search engine during setup. Most users would simply choose Google, as it is the search engine most are familiar with. Google then sustains most of its iPhone users while Apple still loses all of its Google ad revenue.
It seems that if Apple were to lose 15-20% of its annual income in the wake of this antitrust case, the best thing Apple could do would be to accelerate any plans for an Apple branded search engine. This may mean acquiring a search startup and developing it further once acquired. But for now, it seems that Apple will not be too hasty in launching a fully developed search engine of their own. That is, until it is forcibly separated from the Google ad revenue.