Is the Search on for Apple?

The rumour is that Apple is building its own search engine.

Anyone in digital marketing (especially search marketing) is praying to their God of choice that this rumour morphs into reality. As much as we must respect and thank Google for forcing positive change across all forms of marketing, a monopoly stunts innovation, breeds distrust and adversely affects advertisers.

What’s the rumour?

Apple’s web crawler, Applebot, has been accelerating its site indexing activity across the web, adding fuel to persistent rumours around Apple’s intention to launch its own search engine. As Google faces an antitrust lawsuit in the US around its dominance of the search market and public sentiment continues to shift around its use of tracking, it has been tipped that this could be the moment Apple’s been waiting for.

Can Apple change the vernacular?

Looking beyond the wild west of search engines pre-2009, Google has dominated the market. Depending on whose figures you believe, it holds 90-95% of the global search market.

The fact of the matter is that Google, as a search engine, works – news, images, FAQs, shopping – the lot. There is a reason no one says, “I’ll Bing that!”

Even if Apple builds a search engine to rival Google’s, can it really entice ‘Googlers’ away from the search behemoth?

Does Apple have the core skills?

Let’s assume that the speculation is accurate and Apple is poised to launch its own search engine. Outside of iOS and iTunes, which were revolutionary, what has its success rate been when it comes to developing proprietary software?  The short answer is – it has fallen short.

Apple has made it clear that it's not shy when it comes to taking on the big players, but so far the results have been underwhelming. While Siri has made some great strides, it’s a far cry from Google Assistant. Apple Maps was so bad at launch that it caused the resignation of a senior Apple team member. Safari follows a similar story having been slow to update to web standards (although this is set to change with the new version).

But there is change afoot. The announcement of Big Sur (the next major release of macOS) and the integration with the iOS platform alongside the manufacture of its own processors shows that Apple is starting to take back control of its ecosystem.

It has also shown seriousness when it comes to privacy by refusing the FBI’s request to disable certain iPhone security features and reports speculate that an Apple search engine would be ad free; existing to sell more of its devices and subscriptions rather than being an ad-based service.

Are browsers the key to success?

It’s nothing new for operating systems or browsers to control how we, the weak-minded consumer, uses the internet. There’s a reason that Google has been paying $8bn-$12bn each year to be the default search engine in iOS. One assumes that it makes financial sense to pay this fee and it provides Google with a positive ROI. Based on this alone, browsers appear to be key to search success.

On the flip side, while Microsoft’s search engine (Bing) quickly picked up 3% of the market when it launched in 2009, it’s failed to make any real dent to Google’s shares since. Keep in mind that, at the time, Internet Explorer still held over 60% of the browser market and Bing was (and still is) the default search engine. It’s amazing that so many of us refuse to use it.

Here at Indago, we analysed just under 100 Google Analytics accounts to help understand the importance of browsers in the search engine wars and to model what success might look like from a financial perspective.

If we look at our data, over 82% of Aussie searches on Bing originate from Internet Explorer/Edge. Compare this to Google: only 44% of Google Searches originate from Chrome, with 45% driven by Safari. Using this data, we can argue that browsers do have a role to play but only a minor one. What appears to have a major impact is the quality of the search engine.

Does it make financial sense?

The growth of Apple’s hardware presence has led to significant growth in market share for Safari, which now sits at around 16% globally.

To drill down on numbers, let’s assume that Apple:

• builds a great search engine
• makes their search engine the default search engine

Sure, it controls 16% browser market with Safari, but will it control 16% of the lucrative search market? I’d suggest not. Looking at Microsoft’s Bing and our own data I believe it would be almost impossible for Apple to obtain that kind of share.

Statista places Google’s search ad revenue at US$162bn and if Apple can obtain a similar market share to Microsoft’s Bing, we could argue that it’s worth US$4.9bn, which is less than Google is currently paying Apple for doing nothing.

However, we all know what Apple consumers are like – often passionate and sometimes trapped within the Apple ecosphere. If Apple builds a good search engine (and decides to monetise it with ads), I’d estimate that its market share could push 10%, and at US$16bn it would be worth its time and focus.

2021 prediction

It’s easier to call the outcome of the current Covid pandemic than whether Apple is going to come out fighting and take on Google’s search engine dominance. My prediction is that Apple will likely put it in the ‘too difficult’ basket because, ultimately, it’s not a core part of the business.

If it does come to fruition, Google has proven its ability to withstand competition. With its 3.5 billion searches per day and 1.2 trillion searches per year worldwide, Google’s capacity to mine data for improvements and insights is unparalleled.

What Apple can bring to the table is abundant resources, capital (last year it reported US$260bn in revenue with US$83bn in cash reserves), and possibly a more privacy-conscious alternative to Google’s hyper-tracked advertising-based model.

For the health of an advertising medium I truly love and have been working on for over half my life, I hope Apple goes hard and provides us with a much-needed alternative to Google.