Search queries on the iPhone have been powered by Google since the device first launched, but that may not be the case for much longer. The deal between the two companies is set to expire this year, leaving an open door for Yahoo or Microsoft to swoop in and become the default engine on the most popular smartphone in America.
With Apple’s Worldwide Developers Conference set to take place later this month, there’s a good chance we’ll soon learn the tech giant’s decision. And like LeBron James’ own NBA decisions in 2010 and last summer, Apple’s choice is sure to cause huge waves that will be felt across the rest of its industry. Here’s how:
No one has more to lose than Google, which holds the luxury of powering search on both iOS and Android, the two most used mobile operating systems in the world. That’s a position that gives Google nearly every cent spent on mobile search advertising and access to data on the mobile behavior of most smartphone users on the planet.
Consumers love Google Search, but Apple does not. Its relationship with Apple has changed dramatically since the iPhone first came out in 2007. Back then, the two companies were friends -- at one point, then Google CEO Eric Schmidt served on Apple’s board of directors. But then Google launched Android, an iPhone rival, and everything changed. Apple dropped YouTube and Google Maps from its devices as soon as it got a chance, and now, many believe the same will happen to Google Search on Safari.
Any change will cost Google billions of dollars. The search company earned nearly $12 billion in mobile search ads last year, with 75 percent of it coming from Apple devices, according to a recent analysis by Goldman Sachs. That’s $9 billion from iPhone searches, and even if the company can get 50 percent of its Apple users to switch back to Google, it’d still be losing out on $4.5 billion.
"Google is Apple's biggest competitor, and if you can take $5 billion of revenue away from them and withhold data from your biggest competitor, that's a pretty exciting opportunity," said Adam Epstein, president and chief operating officer of adMarketplace, a search advertising company.
Google sees the writing on the wall and is already preparing for life post-Safari. The company has been busy building up its Google Now service, a virtual concierge that tries to get you answers before you ask questions, and last week, it added app-linking features to search that are only available on the Google app and the Google Chrome browser, an effort to steer iPhone users away from Safari.
Yahoo would desperately love to land the Safari search deal. Yahoo CEO Marissa Mayer comes from Google and recognizes the significance of search, a market expected to be worth $82 billion in 2015, according to eMarketer.
Late last year, Yahoo usurped Google as the default search engine for the Firefox Web browser, and Mayer has openly stated her desire to land the Safari deal and instantly become a major player in mobile search. Yahoo has placed its hopes of returning to elite tech status on its mobile, social, native and video advertising businesses, or MaVeNS as Mayer calls it, but landing Safari would be a major boon. At the same time, failing to land the deal would be an enormous missed opportunity.
"They're viewing that as a foot in the door," said Noah Klausman, co-founder of Deeplink, a startup that whose technology allows apps to link to one another. “If they don’t get that deal, it’ll be interesting to see what they do.”
That being said, there is a downside. After becoming the search engine for Firefox last year, Yahoo’s search revenue came in worse than before. Paying for the right to power Firefox may have cost more than the ad sales Yahoo was able to generate from the agreement. This could change over time, but paying for the right to power Safari’s search will only be more expensive -- some estimate Google pays $1 billion per year for the deal. If Yahoo’s Gemini search ad sales team can’t yield better results than what it has for Firefox, landing Safari could be costly.
"The Firefox deal is a pretty big loser for Marissa [Mayer]," said one source with ties to Yahoo and others in the search market. "She swallowed a fish and it gave her indigestion. Is she really going to want to swallow a whale?"
Microsoft hates Google, just look at its Scroogle marketing campaign, and has been trying to turn Bing into the Pepsi of Google’s Coca-Cola since 2009. Landing Safari would allow Microsoft to severely hinder one of its chief competitors while turning Bing into a search engine with legitimate market share for the first time in its existence.
"The Bing advertising business is a big business and something that [Microsoft has] committed to,” said Roger Barnette, president of digital marketing firm IgnitionOne.
There’s plenty of reason to believe Microsoft could land the deal. Bing already powers the search results for Apple’s Siri voice assistant and Spotlight, the search feature built into Apple’s devices. Adding Safari into the mix would simply be an extension of that, and besides Google, there is no one that does search as well as Microsoft. If Apple cares about quality and user experience, Bing would be the way to go.
But for Microsoft, this is all bonus. While Microsoft would love for Bing to finally flourish, the Redmond, Washington, tech giant doesn’t live and die by search advertising. Its core business remains selling Windows and Office subscriptions to companies, and it will survive just fine without Safari.
For Apple, there’s really no way to lose in this situation. The Cupertino, California, tech giant has an excellent opportunity to exercise the full weight of its power on its primary rival, swiftly snatching billions of dollars and vast bits of data right out of Mountain View’s hands.
"It would instantly change the landscape of search marketing," said Brook Shepard, general manager of Mason Interactive, a marketing agency. "Google has effectively a monopoly, and if there was someone that could actually threaten them, everyone would benefit."
But Apple won’t want to simply change one engine for another that simply. For the iPhone maker, this is an opportunity to both improve its user experience and generate more revenue. If Yahoo and Microsoft want in on Safari, they’ll have to pay pretty money and offer Apple a product its users will be happy with.
And then of course, there’s the possibility that Apple may go a different route altogether and build its very own search engine. Just in the past month, there have been numerous signs that Apple could be seriously considering an entrance into the search space, with several “Apple Search” job listings, the confirmation of an Apple Web crawling bot like Google’s and a report from 9to5Mac that the company wants to build a predictive search service like Google Now called “Proactive.”
With 75 percent of Google’s mobile search ad revenue coming from Safari, the iPhone’s Web browser is the “crown jewel” of mobile advertising market, said Epstein of adMarketplace. If Apple ever wants to get serious about digital advertising, now would be the time for it to do so.