Apple has tried to strip Google services like Maps and YouTube out of its products over the last several years.Credit Fred Dufour/Agence France-Presse — Getty Images When Google reports its fourth-quarter earnings on Thursday, one subject that is almost guaranteed to come up is the prospect that Apple could replace Google as the default search engine on Safari, the basic browser on all of its devices. The search contract between the companies is believed to be up for renewal this year.
Given that Apple has spent much of the past few years trying to strip Google services like Maps and YouTube out of its products, the natural question is whether Apple will extend that to Google's bread-and-butter search engine. Representatives from Google and Apple declined to comment on their search deal.
One person who is commenting is Marissa Mayer, Yahoo's chief executive. In a conference call with analysts on Tuesday, Ms. Mayer said Yahoo would seek to replace Google as the default search engine on Apple's Safari browser.
"Safari users are the most engaged and lucrative in the world," she said.
Ms. Mayer, who built her reputation overseeing Google's Internet search business, said that Yahoo remained committed to search. The company is discussing changes to its 10-year search partnership with Microsoft, which is at the midway mark.
So let's say that Apple dumps Google in favor of another search engine like Yahoo or Microsoft's Bing. How bad would that be for Google? According to various reports from analysts, the impact on Google's bottom line would be minimal. There's even an argument that it could come out ahead.
Central to these analyses are two questions that are difficult to answer. The first: How much does Google pay Apple to be the default search engine on iPhones, iPads and Macs? Estimates are all over the place, from 35 percent to 80 percent of the revenue made for searches that go through the Google search bar. The second: If Apple put a new search engine on Safari, how many people would just switch back to Google?
Normally, that second question would be nothing but a wild guess about the future. But, as it happens, Yahoo struck a deal in November to displace Google as the default search service on Mozilla's Firefox web browser, which accounts for 3 to 5 percent of searches. So there is some fresh data to at least consider.
Shortly after the change, Yahoo's share of the United States search market hit a five-year high, according to StatCounter.
But since then, it has started to erode. After the deal, Google's share of paid clicks from Firefox's updated browser –- the one with Yahoo as the default search engine –- fell to 49 percent from 61 percent, according to RKG, a digital marketing agency. However, within two weeks that share had increased to 53 percent as people either switched their default back to Google or went to Google's home page to search.
"They have a loyal user base that will find them if needed," said Mark Ballard, RKG's director of research. "The default search provider isn't a guarantee that you can own the marketplace."
Apple is more important than Firefox, of course. The iPhone has fewer users than phones running Google's Android software, but Apple customers are wealthier and spend more, something that is important to Google since it is really just an advertising company.
Despite that, analysts aren't very worried about the prospect of Safari dropping Google. Carlos Kirjner, a senior analyst at Bernstein Research, estimated that in the worst-case scenario Google's 2015 per-share earnings would be reduced by 6 percent from what they otherwise would have been.
Ross Sandler, an analyst at Deutsche Bank, believes Google could actually come out ahead. That's because while Google has to pay some unknown amount to Apple for many of the Google searches done through Safari, it would not have to share revenue from whatever "recaptured" searches it got after the deal expired.
So even if traffic fell, it might end up making more money per search.
No comments:
Post a Comment