Apple plans a life after Google

Google could lose a third of its business if the courts force it to relinquish its default search deal for Apple’s Safari. It could lose the same thing if Apple voluntarily switches to AI-driven search services from other parties, including Apple itself.

There is no doubt that Google will be the biggest casualty if US courts force it to stop paying Apple roughly $20b a year to be included as the default search engine in Safari. That’s bad news for Apple, but given that Google currently pays Apple 36% of search ads revenue generated by searches via the Apple browser, it’s existentially grim news for Google. It’s doubtful a company seeing its revenue savaged in such a way can easily survive — at least, not in its present form. 

The outcome for Apple is also grim, though perhaps not quite so existentially challenging. Sure, Apple may find itself short of a hugely damaging $20b it is used to receiving from Google, but it still has options, including the creation of its own search service based on the huge quantity of data it has gathered using its own Applebot across the years.

This search feature already exists inside Spotlight search. Apple also has its own ad sales business, so it’s not at all beyond imagining that the company could claw back some of the lost revenue using its own resources.

It’s just that it probably wouldn’t be as good. 

Which leaves it looking for other options. 

Thinking outside the box

Apple SVP Eddy Cue threw feral cats among the Google’s plump little pigeons when he told a US court this week that Apple is looking to add AI search to Safari. The company has already met with third parties who may be able to provide such tools, he said, and while the company didn’t announce anything, he did particularly point to Perplexity as a potential running mate.

Cue was trying to persuade the court not to demand that Google put an end to its Apple payments, but the inference was also pretty clear: If Apple isn’t making money with search, don’t expect search to remain the same. Google’s current search competitors won’t be in the running should Apple switch to AI-based search, as they don’t yet produce a search AI worth talking to.

Google almost does. OpenAI already does. And Apple says Perplexity and Anthropic (which may soon appear within Xcode in some form) seem promising. 

Apple will probably find some way to generate a revenue stream from the provision of AI in search, and while the current in that income stream may not match the torrent of dollars the company attracts from Google’s search traffic, it’s still going to mitigate the problem a little. Cue’s bound to have come up with a plan of some kind — he told the court that thinking about the problem has kept him awake at night, and Cue strikes me as the kind of man who likes to pick up stress, toy with it a little, and turn it into planning.

Of course, Apple doesn’t want to lose its Google income — and Google is working to turn its search service into an AI-driven search service, one devasted ad revenue-deprived web publisher at a time.

Apple has the options here

Hey, why do you think the AI companies want to erode copyright protection? The future of the creative industries certainly doesn’t seem to rank particularly highly on the AI industry radar.  

Other than unfolding horror as those industries are steadily subsumed and replaced by machine intelligence, Apple is the company with the options here. 

Not only does it already have a pile of search data of its own, but it has a strong ecosystem. Even if Eddy Cue can see that we may not have iPhones in a decade, the company has a proven capacity to reinvent itself. If Google finds itself forced to divest itself of part of its business — search, or even Gemini — don’t be too surprised to see Apple take a slice of what’s left behind. It will not relinquish a $20b opportunity without attempting to claw some of that income back.

It’s the latest salvo in the ongoing war between government and Big Tech. Apple and Google face big problems with regulators who seem keen to make an example of the biggest names in tech, even as Apple complains that in some cases, such as in Europe, regulators seem to have decided on their approach to the company’s guilt with little positive consultation.

That’s the kind of approach to regulation that can make a trillion-dollar company paranoid, and like any other entity, paranoid creatures fight vicious and hard. Whatever the outcome, Apple’s existential struggles are nowhere near complete, but it’s very, very far from being out of options. It’s a little less clear how resilient Google might be, however — and investor sentiment seems to reflect this.

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