Apple and Google’s ever-more intricate relationship will often be in the spotlight now as antitrust regulators subject large technology partnerships to greater scrutiny.
Eddy Cue, Senior VP of Services for Apple recently candidly spoke about the reasons why Apple did not enter the search market space despite all the talks surrounding such a move. Such strategic decisions not only depict how it is difficult to step into the search engine business but also show the very thoughtful approach Apple toward preserving its market space by maintaining its core strengths.
Cue believes Apple is strategically focused on other growth areas outside of search. Building a search engine would involve a huge amount of capital investment and would also involve a lot of resources and personnel. According to Cue, building a competitive search engine could cost billions of dollars and take many years to establish effectively.
This would divert the attention from the core business ventures and product innovation of Apple, which are the heart of its identity as a technology company.
The world of online search is always changing, especially with the advancement of AI. Cue emphasized that the economic risks of heavily investing in a new search engine are enormous.
The volatility and unpredictability of technological developments make it a hard sell to justify this investment, especially when the same may result in significant financial loss for Apple in case it fails.
This problem is further compounded by the fact that the search market is growing increasingly competitive and complex.
A successful search engine requires not only great technology but also a platform for targeted advertising, something in which Apple has very little experience. Cue said that building a viable search advertising business is not in Apple’s core competencies.
Apple has experimented with niche advertising within its App Store, but the scale and operational infrastructure needed for search advertising are much more than its current capabilities.
This would further complicate the endeavor since any attempt to enter this market would have to be in accordance with Apple’s strong privacy commitments.
These comments by Apple are made at a time when the U.S. Department of Justice (DOJ) is in litigation to challenge Google’s dominance in the search industry. DOJ officials have proposed that remedies may include forcing Google to modify or end its agreements with companies like Apple that make Google the default search engine on devices.
Apple has now filed to intervene in this antitrust lawsuit, arguing that it cannot rely on Google to safeguard the revenue-sharing agreements on which its financial health depends-estimated at $20 billion in 2022 alone.
In a nutshell, although speculations about Apple’s possible entry into the search market are still rife, Cue’s logic reveals a very clear strategic move: Apple will continue focusing on its current business models and core competencies rather than trying to shift resources into a potentially competitive and uncertain new business. This position will not only safeguard Apple’s existing revenue streams but also be well in line with its more general corporate strategy of innovation and user privacy.
