Apple, Google and mobile search

Apple’s billion-dollar jury verdict against Samsung, the leading manufacturer of Android-based smartphones, has fueled more speculation about the larger war between Apple and Android’s parent, Google, for the hearts and minds of mobile users.

Some observers are wondering if Apple, which is already dumping Google’s maps and YouTube video service as default apps on the iPhone, may try to replace Google’s search engine as well. They note that the iPhone’s Siri is already a step in that direction.

Macquarie Equities analyst Ben Schachter explored that scenario in a research note today and came up with a counterintuitive conclusion: Google may have more leverage than many think.

Stressing that he has no inside information about Apple’s plans, Schachter wrote that if Apple decided to dump Google as the default search provider for Apple’s  iOS mobile operating system, the effect might be more of a publicity setback than an actual financial blow. That’s because Google currently must pay Apple a big share of its advertising revenue for searches on iOS.

Apple could turn to other sources for search results, Schachter added, but those are likely to be inferior to Google. In that case, users could opt for going directly to Google’s search engine through a Google app, or by using the Chrome browser (now available for iOS) or even switching to an Android phone.  And Google wouldn’t have to share any of its ad revenue from those users.

On the other hand, Schachter also said it’s clear that Apple could tap other sources for search results, and not just by switching to Microsoft’s Bing. Apple can use its Siri technology to provide results from OpenTable, TripAdvisor, Wikipedia and other sources. That may be a part of why Google is adding to its own roster of specialized content sources by buying up services such as Zagat, Frommers and flight-information service ITA.


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