In This Love Triangle, Apple Picked Google Over Bing. Here&#8217;s Why
Back in 2020, Microsoft was planning to sell its Bing search engine (now based on OpenAI’s GPT-4) to Apple. The tech giant wanted to market Bing as a replacement for Google Search, the default search engine for all Apple devices. This was a bold move by Microsoft as Bing did not even constitute 10% in the search engine market. Apple, however, continued the partnership with Google that went a long way back to 2002, using Search as a default engine with Apple’s Mac web browser. The Alphabet-owned company pays Apple a handsome price of almost $20 billion annually to keep things as they are. Microsoft Tried, At Least For some time though, Microsoft did pair up with Apple. This happened between 2013 and 2017 where Apple was using Microsoft’s web search engine for Siri and Spotlight, an internal search mechanism for iPhones, iPads and MacBooks. The company came back to Google in 2017 after Apple and Google updated their revenue-sharing agreement. Then in 2020, Microsoft tried to woo Apple by sending a team to meet Eddy Cue, the chief of Apple Services, to discuss selling Bing to Apple. However, these talks were at early stages and did not garner any conclusive deals. Bloomberg reported that Google generated hundreds of billions of dollars in revenue, due to which Apple decided to stay with them. They also had concerns about Bing’s ability to compete with Google in terms of quality and other capabilities. Another reason why Bing did not seem worthy to Apple was that it held less than 10% of the search market. However, Microsoft had plans to outspend Google, as even top-level executives like Satya Nadella and Tim Cook met to eke out a deal. Apple Chose Google Apple could have benefited handsomely by the huge hike Microsoft was offering to pay to outspend Google. Although the amount is not known, at the time of talks, Google paid Apple between $4 billion to $7 billion. Microsoft’s offer would’ve been at least above $10 billion as it reported a profit of $44 billion. However, Apple chose to stay loyal to Google because of its market dominance and the monopoly it enjoys in the search engine space. The Alphabet-owned company commands a whopping 92% in this space at the moment. Besides, Google paid Apple $20 billion this year to remain the default search engine on all its devices. This is almost 1/5 of the iPhone maker’s revenue. In Google’s financial books, it remains the single largest payment made every year. Why Google Pays So Much Google’s main source of income is from advertising spends. Advertisers spend on platforms where a large number of people view it and Google is the biggest of all. There are approximately 4.3 billion active users on Google and almost 2 billion of them come from Apple. As the numbers suggest, Apple brings in half of Google’s users. According to market research, Apple users are worth more than Android users. It all boils down to the spending power. From the advertiser’s perspective, people who own an iPhone, iPad or a MacBook are more likely to buy the product being advertised as their spending power is high. According to advertising research firm Asymco, Apple iPhone users are worth 7.4 times more than Android users. So, it makes sense for Google to spend a large amount of money on Apple users if they get 7 times more from advertisers. Apple controls more than half of the North American market. Therefore, if it were to switch to Microsoft, it would be a tremendous loss for Google, in terms of users and mainly in terms of revenue. Besides, people are so used to using Google, that even if Apple switches, users will reconfigure their default search engine settings to Google. Meanwhile, Apple is so devoted to having Google as it’s default web browser, that changing it would be a complicated process. The New York Times said in an article, “It’s hard to switch — and most people would probably give up before completing the change.” This partnership is the best representation of a symbiotic relationship in a tech ecosystem.
Microsoft had made the audacious bid to offer Bing, powered by OpenAI’s ChatGPT-4, as an alternative to Google on Apple devices
Microsoft had made the audacious bid to offer Bing, powered by OpenAI's GPT-4, as an alternative to Google Search on Apple devices
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["AI", "OpenAI", "R", "Go", "GPT", "llm_models:GPT", "programming_languages:R", "programming_languages:Go"]
As a financial journalist, Pranav covers various beats from Technology, Telecom and Companies. He follows the money trail, and dives deep into how companies utilize their funds. He loves to travel and is an aviation geek.