The Google-Free iPhone
When the iPhone launched in 2007, there were three key components of the device that relied on Google:
3) Web search
Let’s look at that list today, following the news that YouTube has been given the boot in the latest beta build of iOS 6:
1) Maps 2) YouTube
3) Web search
Two down. One to go.
There is a good argument to be made that it’s actually more beneficial to Google that Apple is no longer including the YouTube app (which Apple, not Google, built, by the way) as a standard part of iOS. For one thing, the app hasn’t really been touched in years, even as Google significantly upgraded the YouTube experience on other platforms (and the mobile web). More importantly, Google was not able to monetize those YouTube app views with ads. With its own app, it will be able to.
With that in mind, it’s possible — perhaps even likely — that it was Google and not Apple which decided not to continue the relationship going forward. Maybe we’ll hear the whole story one day, maybe not. At the end of the day though, the reality is that the move is something that both sides probably wanted to some extent. Google for the reasons mentioned above. Apple because Google is now its chief rival in the mobile space.
And the move does follow Apple’s decision to launch its own mapping application this fall as the standard part of iOS 6. There should be no doubt that this maneuver was all about Apple removing Google from a key part of its devices. And the ramifications of this are actually bigger than you probably imagine at first glance. But they’re nothing compared to what would happen if Apple removed Google as the default web search engine in iOS.
To be clear, you already have a choice when it comes to search on iOS. There’s Google, Yahoo, andsince the summer of 2010, Bing. But each iOS device sold comes with Google set as the default. And very few people change that setting. Let’s be honest, the default is all that matters.
That’s why Apple has the power to truly hurt Google where it counts. Just imagine if it made Bing the default search engine for iOS devices, and Google a mere option…
Of course, this thought is nothing new. In fact, as far back as early 2010, it was reported that Microsoft and Apple were in talks about this very possibility. We even followed up on this in mid-2010 (which ended up being the Bing option in iOS 4, not a change of the default setting). Clearly, it never happened. But as I laid out two and a half years ago, there are a lot of reasons why Apple at least had to consider this option. And actually, those reasons are now more true than ever.
Despite billions and billions of dollars being poured into Bing, Google still dominates search. And as the world goes increasingly mobile, Google threatens to own an even greater piece of the pie. The only two platforms that really matter in mobile right now are iOS and Android. Again, Google is the default search engine in iOS. And Google owns Android. You do the math.
Yes, Microsoft hopes that Windows Phone and the forthcoming Surface/Windows 8 tablets can change this equation. We’ll see — but I wouldn’t hold my breath. The more direct route to change the equation is to pay Apple a shitload of money to make Bing the default in iOS.
Two problems here.
One, Apple doesn’t need the money. Even a shitload. In fact, any shitload Microsoft can offer would pale in comparison to the shitload Apple already has.
It’s believed that Google now pays Apple upwards of $1 billion a year as a result of being the main search engine for iOS. (Just two years ago, the number was believed to be closer to $100 million, which is insane growth and shows just how important this area is.) But $1 billion is a drop in the bucket of the $150 billion (!) Apple may bring in this fiscal year. Even if Microsoft offered $2 billion, or $5 billion — it still probably wouldn’t be enough to be meaningful to Apple’s bottom-line.
This leads to problem number two — at the end of the day, Apple still cares first and foremost about user experience. If Apple was going to switch away from Google, it would have to be because Bing offers a better experience — or at the very least, one that is on par with the search experience that Google offers.
This is where a second religious argument could break out — there are some people who swear Bing is better at search, but seemingly still more that believe Google is better. I’m not here to argue about that because, quite frankly, I don’t use Bing enough to really know. My sense is that for most things, they’re pretty close. And if Apple agrees with that, it’s potentially great news for Bing.
In the broader search market, “pretty close” is worthless. This isn’t horseshoes. Bing has to be leaps and bounds better than Google to steal market share because Google dominates mind share. Despite the billions spent in marketing, “Google”, not “Bing”, is the verb. But in mobile, with a willing partner who owns a key platform and controls defaults, “pretty close” matters. Apple could pull the trigger to hand the keys of its search kingdom over to Bing. Again, if it truly is “pretty close”.
You could also argue that some of the social integrations Bing has been doing recently make the search engine more interesting to Apple. After all, now Twitter and Facebook will be fully baked into iOS. And Microsoft has search deals with both of them — while Google has deals with neither of them. My guess is that Apple does not care about Google+ search integration. In fact, that may be another factor tipping the scales in Bing’s favor, since you could argue that it makes Google search worse.
More important than the money, it may be worth it for Microsoft to agree to work closely with Apple to create a version of Bing that blows away what Google can offer in terms of web search on iOS devices. The question there is if two life-long rivals would put aside the many differences to battle an enemy that is even more hated by both? My guess is yes.
Two years ago, maybe such a partnership didn’t make sense. But again, everything that was true two years ago is more true now. Bing hasn’t made a meaningful impact in Google’s search share. Billions of dollars have been burned. Windows Mobile is dead. Windows Phone has gone basically nowhere. Apple and Google are fighting more than ever before (though proxy battles, even). And mobile is more important than ever before — especially for search.
And yet, Apple is directly responsible for billions of dollars being sent Google’s way via search on its devices. This will only continue to increase. It’s believed that Google makes more money off of iOS devices through search than they do through Android devices. In other words, Apple is indirectly subsidizing a portion of the major war against itself. Yep.
If a Bing deal ever happens, that may be the key factor. Apple is sending billions of dollars Google’s way. It doesn’t care about the money being sent back. It need to cut off that pipeline.
I can only imagine it hasn’t done such a deal yet because of the user experience issue. And perhaps Siri played a role as well. No doubt Apple thinks that Siri can help remove the need to search the web in the first place. But let’s be honest again: we’re nowhere near that. Siri will have to get much, much better for that to happen. And there would have to be a paradigm shift for that to happen. I’m not saying it’s impossible, but a Bing deal is more realistic.
Earlier today, news hit that Google’s Chrome browser has overtaken Microsoft’s Internet Explorer as the most-used browser on the web. This is significant because not even Mozilla’s Firefox was able to accomplish this feat — and Google did it in just four years. More importantly for the topic of this post, Chrome is like growth hormone for Google Search. No one types in URLs anymore, they simply search.
At the same time, with Mountain Lion, Apple added an “omnibox” to Safari, so people will be searching a lot more. The default search engine there? Google.
Microsoft needs Apple to make Bing relevant. Apple needs Microsoft in order to stop paying Google billions. This is so obvious. I think we may see a Google-free iPhone sooner, rather than later.
(Footnote: You could argue that Gmail is another key Google iOS integration, but it has always been one of a few email options and has never been the default one. Further, since it still doesn’t offer true push email, it sucks. Don’t try to convince me of the Exchange re-routing nonsense. Gmail on the iPhone sucks.)