According to a recent complaint filed with a U.K. antitrust regulator, Apple and Google are working a bit too closely for comfort. The complaint alleges “collusion at a very senior level” of both companies when it comes to search engines.
But make no mistake: While things certainly cooled down since the days when Apple co-founder Steve Jobs threatened to go to “thermonuclear war” against Google, the two companies remain on a collision course. And the conflict will come over the exact same issue they’re currently allegedly colluding on.
It’s all about the future of search as we know it.
Silicon Valley is filled with frenemies
One of the most fascinating aspects of watching the interaction among tech giants is seeing the myriad ways they both rely upon, and compete against, each another. On the surface, Apple, Amazon, Google and Facebook all offer very different core products with minimal overlap. But tech giants driven by constant growth requirements don’t exactly stay in their lanes.
Each has, at some time or other, launched products that stray into another’s territory. Not all of these have been successful (think Apple’s social network Ping or Amazon’s Fire Phone). But the overall trajectory has been of ever-greater competition between these massive companies.
Right now, Apple and Facebook are the big Silicon Valley feud. Apple and Google, by comparison, are veritable besties.
Today, Apple reportedly gains from 14% to 21% of its annual profits from an agreement that makes Google the primary search engine on iOS. Last year, the two companies put aside their differences to make a contact-tracing API to battle against COVID-19. As far as the world is aware, Google and Apple are closer than they’ve ever been.
Will Apple and Google battle again?
But will peace last? That’s the bit that’s going to be interesting to see. I’d warrant it won’t. In his book The Four: The Hidden DNA of Amazon, Apple, Facebook and Google, Scott Galloway, adjunct professor of marketing at the New York University Stern School of Business, points out how Amazon has creeped up on Google as a rival in the search business.
No, Amazon doesn’t field a proper search engine of its own. (At least, not like Google.com). What it does have is a search bar on its own website — and it is brutally effective.
“Each year, Google and brand.coms lose product search volume to Amazon (6 to 12% for retailers for 2015 to 2016). Conventional thinking is going to Amazon to buy. In reality, 55% of product searches start on Amazon vs. 28% on search engines such as Google. This shifts the power, and margin, from Google and retailers to Amazon.”
Apple, despite rumors over the years, also doesn’t operate a search engine. As noted, Google is currently Apple’s big provider in this space: an arrangement that benefits both companies. While Siri search rankings are powered by Apple’s own AppleBot web crawler, this is still a fraction of the searches carried out on Apple devices. So why would that change?
The future of search isn’t browsers
A new article from app analytics platform Sensor Tower offers an interesting tidbit. Apple’s App Store search is responsible for 59% of app downloads. Meanwhile, web referrals languish at 8%. This is interesting, but it doesn’t tell the whole story. These figures must also be considered alongside the fact that mobile usage is now higher than desktop worldwide. Plus, the overwhelming majority of time on mobile is spent using apps rather than using browsers.
Apps provide a deeper experience that’s not replicable using web apps. The app-centric vision is one that Apple bought into way back in 2008, and which it has been richly rewarded for. Last year, the App Store enjoyed its best year ever — and that trajectory doesn’t look like it’s going to slow down anytime soon.
As demographics change, and the generation that grew up with smartphones becomes a larger part of the market, web browsers will continue to diminish in importance. It seems unlikely that the West will ever have an exact analog for WeChat, the Chinese mobile app that’s more like an operating system than a single app. But ever-increasing mobile app abilities, and more time using them, seems to be a clear trajectory for the future.
It’s all about the ads
An overwhelming majority of Google’s revenue comes from advertising — it accounted for $146.92 billion in 2020 — with search advertising making up most of that. As the world moves away from browsers, apps and vertical search engines will eat into that giant revenue pie. And that will hurt Google (which partially explains why Google is pushing so heavily into apps itself).
Apple is playing a long game here, and it’s one that it stands to win. Right now, things may look cosy (maybe even a little too cosy) on the Apple and Google “friends forever” front. But don’t expect the peace to last.
As search continues to evolve, “Apple versus Google: Thermonuclear War II” could make for an unsettling sequel.