Microsoft was apparently planning to sell its Bing search engine, which is now based on OpenAI’s ChatGPT-4, to Apple back in 2020. The tech giant was planning to market Bing as a replacement for Google’s search engine which is default for all of Apple’s devices.
This was a bold move by Microsoft as Bing did not even constitute 10% in the search engine market. It was a wild attempt by the tech giant but no vain. Apple continued the partnership with Google, using search as a default engine with Apple’s Mac web browser, that went a long way back to 2002. The Alphabet-owned company pays Apple a handsome price of almost $20 billion annually to keep things as it is.
Microsoft Tried, Atleast
For quite some time, Microsoft partnered with Apple. This happened between 2013 and 2017 where Apple was using Microsoft’s web search engine for Siri and Spotlight–which is an internal search mechanism for iPhones, iPads and MacBooks. The company reverted to Google in 2017 after Apple and Google updated their revenue sharing agreement.
Back in 2020, Microsoft tried to establish its connections with Apple. The management from Microsoft met 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 the ability of Bing to compete with Google in quality and capabilities. Another reason why Bing did not seem worthy to Apple was that it just had less than 10% of searches.
However, Microsoft had plans to outspend Google, as even top-level executives like Satya Nadella and Tim Cook met to discuss a deal.
Apple Chose Google
Apple could have benefited handsomely by the huge hike Microsoft was offering to pay to outspend Google. The hike is not known, but 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.
Apple chose to stay loyal to Google because of its market dominance and monopoly it enjoys in the search engine space. The Alphabet-owned company commands a whopping 92% in this space. 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.
On Google’s financial books, it is the single largest payment that’s made every year.
Why Google Pays So Much
Google’s main source of income is from Advertising spends. Advertisers spend on platforms where large volumes of people view it. 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 boils down to 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 they’re spending power is higher. This is in context of iPhones being costlier than any average android phone.
According to 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 is 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.
The post In This Love Triangle, Apple Picked Google Over Bing. But Why? appeared first on Analytics India Magazine.
