While the US antitrust authorities are circling Google, Apple has redoubled its efforts to develop its own technology in the coveted search field.
In the latest updates to iPhone operating systems, Apple now displays its own search results and links directly to websites when users enter queries via its home screen.
This shows progress in Apple’s in-house development and, in addition to what is currently going on in the halls of power, could be the building block for a broader attack on Google’s dominance.
The move underpins evidence that Apple may be working to build a rival to Google’s search engine, the Financial Times reports.
However, this could be a problem for profit.
On October 20, the Ministry of Justice filed an antitrust lawsuit against Google, accusing Google of becoming a “gatekeeper” for the Internet and abusing its position to prevent the rise of competitors.
Officials were also suspicious of Google’s agreements with Android, where Google had demanded that its search tools be pre-installed on devices that use the operating system.
Other smartphone vendors such as Huawei had also made an attempt to develop their own search engines. The newly developed “Petal Search” is a coup at Google as the standard search tool.
Google’s control over around 80 percent of the US search market is too great, according to the antitrust authorities. The remaining 20 percent is not enough to attract enough audience to grow, which would mean real competition.
The DOJ’s argument revolves around the fact that consumers have few other search options, while advertisers also have less choice.
Despite the fact that this is primarily a case against the search giant, it could have a strong impact on Apple.
Google pays Apple an estimated $10 billion a year to be the default search engine on its devices. Google now sees about 50 percent of search queries coming from Apple products.
As hardware growth cools in the market, maintaining this type of business is critical to Apple’s margins. The payments are profitable.
Apple’s financial results for the quarter are due to be released tomorrow and will provide an indication of whether hardware sales will continue to slow. Previous financial releases have shown that Apple’s profits throughout the fiscal year benefited from services that grew five times faster than hardware.
“The development of Apple’s search is an enormously ambitious goal, and it will be difficult for Apple to catch up with Google. But the company has a huge pile of money, so it can accommodate these resources,” Susannah Streeter, senior investment and market analyst at Hargreaves Lansdown told Tekk.tv.
“There are only a limited number of iPhone or iPad upgrades you can order, so services will be a key area”.
Streeter believes in the future that Apple could generate revenue by bundling services and streaming.
Forbes estimates that service revenues would drop by around 22 percent if Google’s search business were terminated. This would reduce total revenues by 4 percent.
Google referred to an extensive public blog written in response by Kent Walker, the company’s SVP for global affairs. The blog described the DOJ’s complaint as “dubious” and “deeply flawed” and said that “people use Google because they want to, not because they are forced to or because they can’t find alternatives”.
With regard to the Apple partnership, he refers to the fact that “competitors Bing and Yahoo! [also]pay to appear in prominent positions” and that it is “easy” to switch the search engine to Safari.
Apple had not responded to requests from Tekk.tv for comments at the time of publication.