Tuesday, May 21, 2024
Smart Phones

Apple and Microsoft discussed selling Bing to Apple in 2020

You might already know that Google pays Apple some obscene amount of money to have Google’s search engine be the default option on the iPhone. But according to Bloomberg, in 2020 Apple and Microsoft held talks to discuss the possibility of Apple acquiring Microsoft’s Bing search engine. Apple’s Services VP Eddy Cue represented the Cupertino-based company in the talks. Bloomberg called the talks “exploratory” and said that they “never reached an advanced stage.”

Whatever Google pays Apple for its search engine to be the default on iOS, Google must be making billions more

The reason why the talks with Microsoft stalled had much to do with the large amount of money that Apple was receiving and still receives from Google each year. We’ve seen estimates of this payment ranging from $4 billion to as much as $20 billion. The DOJ believes the actual range is $4 billion to $7 billion annually. Apple did not want to lose this cash flow. Considering that Google is not in the business of giving away money, you can imagine how much the company and its parent Alphabet must make from being the default search engine on the iPhone.

However, some of the reasons that Apple had for not acquiring Bing had nothing to do with the big check that Apple receives from Google every year. While it was the main reason, of course (would you turn down billions of dollars from Google every year?), Apple was also said to be concerned that Bing could not compete with Google Search in quality and capabilities.
Interestingly, when Microsoft first added Generative AI feature ChatGPT to Bing, there were rumors that Samsung was going to drop Google as its default search engine for the Galaxy line of handsets and bring in Bing as a replacement. Google has been the default search engine on Galaxy handsets since the first Galaxy S device was released in 2010. A month after this rumor started spreading, it was reported that Samsung decided to suspend an internal review dealing with this possible change.
Google’s deal with Apple for its search engine has become part of the testimony heard during the trial now underway between the Justice Department and Google over antitrust issues. Microsoft VP Jon Tinter said under oath that in 2016 Microsoft CEO Satya Nadella met with his counterpart at Apple, Tim Cook, to discuss Bing replacing Google everywhere on iOS. Since Bing was much smaller than Google Search, Tinder said on the stand that Microsoft would have “had to offer Apple a far larger percentage of the revenue than Google.”

Microsoft and its Board discussed how to tell stockholders why a multi-billion dollar hit would be good for the company

As a result, a deal with Apple to replace Google Search with Bing would have resulted in a multi-billion loss for Microsoft. Executives at Microsoft met with the company’s Board to try and figure out how they could explain to stockholders why it was in the company’s best interest to take a hit on such a deal.

Under oath, Tinder told the court, “In the short term, it would have been highly negative. We told the board that we are thinking about making a multi-billion negative investment to support this. It was all around trying to make them confident that we could make the switch.” Two years later, in 2018, Microsoft and Apple discussed using Bing instead of Google on iPhone units outside of the U.S. But once again, nothing came of it. And after another two years had gone by, the aforementioned exploratory talks between the two tech giants about Apple acquiring Bing started and quickly ended.

Google could end up being forced to break up its search business and other units that generate ad revenue

Even though Microsoft seems to acknowledge that Apple will never buy Bing, another Microsoft executive, Mikhail Parakhin, in charge of ads and web services at Microsoft, said that Apple makes more money from Bing than Bing does if only because keeping Bing around keeps Google worried enough to continue cutting those big checks to Apple. The guys in Redmond still continue to speak to Apple about replacing Google with Bing with the last conversation taking place in 2021.
The DOJ vs. Google trial started on September 11th and will run for a total of 10 weeks. U.S. District Judge Amit Mehta is presiding over the trial and after a break in November, more papers will be filed with the court; the judge is expected to make a ruling early next year. If the judge rules against Google, another trial will be held to determine what penalties Google should face. The company might be required to break up some of its search-related businesses along with other business units that generate advertising revenue for the company.


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