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Apple and Google’s marriage of convenience

David Gura Jan 22, 2015

Apple and Google’s marriage of convenience

David Gura Jan 22, 2015

It is a marriage of convenience that some say has been on the rocks recently.

Google is the default search engine in Apple’s Safari browser, so when you use Safari’s search function, the browser automatically sends your query to Google. Many analysts say that deal will soon expire.

Safari users don’t have to use Google, but search engines bet most users won’t bother to change a browser’s settings, according to Stan Liebowitz, the Ashbel Smith professor of economics at the University of Texas at Dallas. A fair number of people “just go with the default,” he says.

This relationship started in 2007 when Apple introduced the first iPhone. Yahoo and Microsoft have been trying to break it up since.

“Oh, I think they would certainly like to be the second wife,” says Kim Forrest, senior equity analyst at Fort Pitt Capital Group. She says this marriage has been mutually beneficial: Apple hasn’t had to create its own search engine, and Google gets automatic access to millions of Apple users’ eyeballs.

“Search is a huge moneymaking business,” she says. “You can print money if you can do it correctly, and we know Google does that.”

Ninety-six percent of what Google makes comes from search. It is a $54 billion business.

This browser-search engine wedding may have made more sense when it happened, before Apple and Google were really rivals, but the marriage became awkward and acrimonious – and Apple may want out, according to Danny Sullivan, founder of the news and information site Search Engine Land.

“It would be easier to partner with someone else that doesn’t have as strong a challenge with them in the tablet and phone space,” he says.

Apple has already made moves. Last June, the company switched the default browser its digital assistant uses from Google to Microsoft Bing. “They made this shift in Siri, and really, nobody screamed that, ‘wow, I don’t get my Google results anymore,’” Sullivan says.

Apple declined to comment, and Google did not get back to Marketplace.

So why are Yahoo and Microsoft – and maybe a few smaller search engines – coveting their neighbor’s deal? Anindya Ghose, a professor of IT and marketing at New York University’s business school, says that “more than 53 percent of search is coming from smartphones, and a big, big part of the smartphone market is owned by Apple.” Ghose also has consulted for Apple and collaborated with Google and Microsoft.

While declining to comment on specific partnership opportunities, a Yahoo spokesperson says the company is “always looking to explore ways through which we can grow our search presence.”

The terms of Apple’s deal with Google are not public, but analyst Richard Kramer, founder of London-based Arete Research and a Yahoo investor, says Google has a similar deal with AOL. “They get paid about $100 million a quarter to send traffic Google’s way,” he explains.

Mozilla recently switched the default search engine in the U.S. version of its Firefox browser from Google to Yahoo. The two companies call it “a strategic five-year partnership.”

Entrepreneur John Battelle, author of “The Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture,” wonders how many Firefox users missed Google enough to switch back.

“I’m sure Mozilla knows that down to the fraction of a decimal point, but unfortunately, we don’t,” he says.   

Denelle Dixon-Thayer, Mozilla’s senior vice president of business and legal affairs, told Marketplace in statement: “We don’t have any data to share at this stage, but so far we have been pleased with initial results and feedback from our users.”

The change rate in Safari is something search engines will consider carefully when this Apple deal comes up for renewal. 

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