Remember when Facebook was going to take on Google in the search business?
If not, then you’re not alone. The effort didn’t last long. It died about the same time Google gave up on the idea of challenging Facebook in social networking, more than half a decade ago.
Now Apple is gearing up for a try in search. It has been crawling more of the web to build a search index, placing some of its own search results in front of iPhone users, and hiring engineers, as it accelerates what is likely to be a long and expensive effort.
The prospect of a return of the internet search wars raises an interesting question: Why hasn’t there been more competition between the biggest tech companies in the core markets that have defined them? And can regulators nudge them into more open rivalry?
One answer to the first question is that the leading consumer tech companies have been able to become some of the world’s most valuable concerns without needing to tread on each other’s toes too much.
Another is that head-on attacks are expensive and mostly fail. Microsoft threw billions of dollars at search, as well as smartphones, before giving up on both. Beating an entrenched rival in tech by fighting on its home turf is usually a losing proposition.
Instead, the leading companies have thrived as partners and customers, supporting each others’ core platforms. Amazon has long been one of the biggest purchasers of Google’s advertising. Facebook and Apple developed an important symbiosis in the early years of smartphones. After years of bitter feuding, Microsoft and Google buried the hatchet a few years ago and have been finding points of mutual interest.
This hasn’t prevented competition in other areas, particularly in newer markets. There is no love lost between Microsoft in Google in productivity apps, and the giant cloud computing business has been turning into a three-horse race between these two and Amazon.
Apple’s interest in search is a sign that the tech companies are starting to encroach more deeply into each others’ core markets. Their scale and ambition have reached a point where they can’t help but conflict. And all are driven by the same imperative, to dominate the next big computing platforms.
Apple and Facebook have been on a collision course. When Facebook announced its plans this week for a cloud gaming service, it was staking a claim to one of the most popular activities on smartphones. Conspicuously, it said the new service wouldn’t immediately be available on Apple’s devices, blaming the iPhone maker for exerting “control over a very precious resource”. One of Amazon’s fastest growing businesses, meanwhile, is advertising, as it fights with Google to become the starting point every time someone starts to look for a product to buy online.
Regulators could help to prod things along faster. The US government’s antitrust complaint against Google last week took direct aim at the deal with Apple that has planted its search engine prominently on the iPhone. It makes perfect sense for Apple to accelerate its own search efforts as a hedge against losing this deal. It also has a better shot at succeeding against Google where others have failed.
There are three things in particular that have made it hard to compete with Google in search: brand, eyeballs and data. Apple ticks all three boxes.
It already has one well-known brand in this area — Siri — and the Apple name itself has stretched to services. As for eyeballs: keeping the default position on its devices for its own search engine would provide an instant audience and rob Google of the very thing that the DoJ says has given it an unfair advantage. And by starting small — the latest version of iOS — it stands to collect data on billions of queries, helping it improve the relevance of the results it returns.
Google has a fourth advantage in search that could be more of a stumbling block, at least for Apple’s shareholders: monetisation. By generating more advertising revenue per search than anyone else, it has been able to funnel a huge amount of cash — to the tune of $30bn last year — to the many companies that give a prominent place to its services.
It has also had a strong incentive to maintain payments to Apple at a high enough level to discourage the iPhone maker from thinking too hard about entering the search business itself. But as Apple’s heightened interest in search makes clear, the ground could finally be starting to shift.
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