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Apple Has What It Needs to Launch Its Own Google Replacement

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Apple has the wherewithal to launch its own search engine, a replacement for Google. And Microsoft even approached the company about helping make that happen. Also: Apple addresses iPhone 15 overheating as complaints mount, Meta launches the Quest 3, and Peloton teams up with Lululemon.

Last week in Power On: First impressions of Apple’s iPhone 15 Pro Max and the Ultra 2 watch. Paid subscribers heard about the biggest challenges facing Apple’s chip efforts and what the next iPhone SE might look like.

The Starters

Smartphone screens displaying various app searches.
For years, Apple Inc. pondered building a search engine that could replace Google as the preferred option on its devices.

The argument: Search is one of the most used tools on smartphones, tablets and computers — and Apple’s modus operandi has long been to own the core technologies underlying its products. There are also billions of dollars at stake. Right now, Apple gets a cut of Google’s search ad revenue, a commission that has brought in roughly $8 billion annually in recent years. But imagine if Apple could keep more of that money.

If the company successfully deployed its own search engine, it could potentially create a revenue stream about the size of the Apple Watch, assuming it can sell advertising and search slots at the same price as Google. The probability of that happening is a long shot, but — even if Apple can’t quite match Google — the company could probably create more revenue by bringing search in-house.

Apple knows this. That’s one reason why it’s been tinkering with search technology for years. The work has its benefits, even if the company doesn’t launch a Google rival: Apple can improve its non-web search capabilities, and it could serve as a frightening bargaining chip in pricing negotiations with Google.

Google may be dominant in search, but the company still needs Apple and its billions of users. As long as their agreement is in place, Apple has an incentive to steer its customers toward Google. The more Apple promotes Google search, the more money Apple makes.

As a person involved in the deal has told me, aligning the incentives of Apple and Google was a big part of the agreement. Apple could send all its customers to the DuckDuckGo search engine if it wanted to, but that would just hurt Apple.