Apple and Google have been in a lucrative partnership for years, with Google paying Apple billions of dollars a year to be the default search engine on the iPhone. But this deal may be at risk due to an antitrust lawsuit filed by the U.S. Department of Justice against Google, accusing it of abusing its dominance in online search and advertising.
The lawsuit alleges that Google has used “exclusionary agreements” with device makers and carriers to lock out competitors and maintain its monopoly in search. One of these agreements is with Apple, which receives an estimated $18 billion to $20 billion a year from Google for making it the default search engine on the iPhone and other devices.
This arrangement benefits both companies, as Google gets access to a large and loyal user base, while Apple gets a significant source of revenue from its services segment. However, it also harms consumers and innovation, as it limits their choices and prevents new entrants from challenging Google’s dominance.
The lawsuit could have major implications for the future of search, as it could force Apple and Google to end or modify their deal. If that happens, Apple could either switch to another search provider, such as Microsoft’s Bing or DuckDuckGo, or launch its own search engine to rival Google.
According to a report by Financial Times, Apple has been ramping up its efforts to develop its own search technology, as evidenced by its increased activity in crawling the web and delivering more search results directly on the iOS 14 home screen. The report also cites industry sources who say that Apple has poached several engineers from Google’s search team in recent years.
Apple has not confirmed or denied its plans to launch its own search engine, but some analysts believe that it is a logical move for the company, as it would give it more control over its ecosystem and user data. It would also align with Apple’s stance on privacy and security, which has been a point of contention with Google.
“Apple’s position is very clear — they want to control the premium user experience,” said Ben Wood, chief analyst at CCS Insight. “And advertising-based models are always inherently at odds with that.”
However, creating a search engine that can compete with Google is not an easy task, as it requires a lot of resources, expertise and data. Google has been refining its search algorithms for more than two decades, and has invested heavily in artificial intelligence and machine learning to deliver relevant and personalized results.
“Google’s advantage is huge — they have been doing this for a long time and have accumulated a lot of data,” said Neil Mawston, executive director at Strategy Analytics. “Apple is playing catch-up in a market where first-mover advantage is very important.”
Moreover, Apple and Google may face antitrust pressure in other markets as well, such as Japan, where regulators are investigating their app store policies and fees. The Japan Fair Trade Commission (JFTC) has launched a survey on how Apple and Google collect fees from developers who sell apps or offer in-app purchases on their platforms. The survey aims to determine whether the app store operators are abusing their dominant positions and harming competition.
The JFTC has also received complaints from developers who say that Apple and Google have unfairly rejected their apps or forced them to use their payment systems. Some developers have also accused Apple of copying their features or favoring its own apps over third-party ones.
The app store fees have been a contentious issue for many developers around the world, who argue that they are too high and stifle innovation. Some developers have taken legal action against Apple and Google, such as Epic Games, the maker of Fortnite, which sued both companies for removing its game from their app stores after it introduced its own payment system.
The outcome of these antitrust cases could have significant implications for the future of search, as well as the broader digital economy. They could reshape the balance of power between Apple and Google, as well as between them and other players in the industry. They could also affect the user experience, privacy and choice of millions of consumers who rely on their products and services every day.
Relevant articles:
-Google pays Apple $18B to $20B a year to keep its search in iPhone, The Register, Oct 10, 2023
-Apple required to face an antitrust lawsuit over Apple Pay, Android Headlines, Sep 29, 2023