Apple Should Buy a Search Engine, Analyst Says
barrons.com
barrons.com
First, Apple is building a search engine, in a non traditional sense, by providing a first level of results directly via Safari suggestions and Spotlight/Siri on client devices. That layer gives them enough ability to capture specific verticals should they find them profitable.
Second, and more subtle question, would be whether to become a full-fledged player in this space. Apple, of all tech companies, seems to care the most about the bottom line and does not go about reckless dick-measuring contests. Building search is hard, and it is questionable that Apple in the medium term would be able to profit more than it already does from Google search. At very least this would be a can of worms they open with unknown profitability. Note that to make money off of search you have to also build the ad side of things and then try to compete with Google who owns the rest of the ecosystem and has levers to undercut you. It’s even possible that the current arrangement is more favorable to Apple, as Google indirectly benefits by preserving their monopoly and may be willing to pay even more than that particular transaction should be valued independently.
Where owning the search space matters to Apple most is the option value, and Apple so far has a cheap way to do it (Microsoft had been paying the costs). In addition, Apple has been minimally boosting DuckDuckGo by giving it some free exposure for the just-in-case scenario.
My take is Tim Cook is going to watchfully wait and let this play for as long as possible while ensuring they have enough leverage to keep Google paying up, instead of pulling another Apple Maps.
Right now the focus is to take some Android marketshare mid-market and sell some services there. Once they own quite a big chunk of client devices, perhaps it will make sense to give the middle finger to Google.
P.S. all of this is especially true now that Pixel has failed to capture any meaningful share of the high end iOS market to be a real threat for Apple.
DuckDuckGo (with a better name and more polish) could be an Apple product. It wouldn’t be that expensive to buy and they don’t need to put as much ads on it as Google does, they only need 30% of income to make as much as they make now.
I wouldn’t be surprised by such a move.
This would also undermine Apple's efforts to win over privacy-conscious consumers.
In order to stop paying a third-party for search results, Apple should buy a company that mostly pays third parties for search results?
> Apple could likely buy it for under $1 billion
> a deal would be fairly easy to digest given DuckDuckGo’s small size, with fewer than 100 employees.
Exactly what kind of tech does this author think DDG has that Apple couldn't build better than DDG with 1,000 employees making a $500,000 salary for 2 years?
I love DDG, but I don't think this person really knows what it is.
> Sacconaghi estimates that Alphabet (ticker: GOOGL) pays Apple (AAPL) between $7 billion and $8 billion a year for Google to be the default search engine for iOS ...
The real figure is probably $12 billion - https://fortune.com/2018/09/29/google-apple-safari-search-en...
> Google pays that large sum to Apple in part out of concern about what Microsoft (MSFT) might be willing to pay Apple to supplant Google with Bing*
Unlikely. Apple does not have search, and they simply need the best search available for their devices to stay true to being "premium".
> Sacconaghi thinks Apple should consider acquiring the No. 4 search engine (after Google, Bing, and Yahoo)—privately held DuckDuckGo. He thinks Apple could likely buy it for under $1 billion, “
This is completely off. DDG is highly unlikely to be worth that much. As discussed in this other thread - https://news.ycombinator.com/item?id=23458202, DDG is dependent on Bing both for search and ads.
> And he also writes that “If Apple attempts to acquire DuckDuckGo but is blocked by regulators, it would arguably put Apple in a worse position than ever, given that Google and Microsoft would then know Apple has no alternatives.”
This does not make much sense to me. It's not the kind of thing I see regulators going after. Happy to be schooled though.
That being said, how did Apple Maps turn out vs Google Maps?
Best is subjective, and Apple Maps UI is leagues ahead of Google Maps in my experience. Accuracy is improving over time.
With recent quality improvements I take Apple Maps over google maps grand majority of time (well in pre-lockdown life). It took a while but I think its finally working out genuinely well now.
Apple continue to use AMD graphics cards in all of their products, despite Nvidia having the clear and obvious edge at the high end.
Analysis: "Apple can make such acquisitions for less than $1 billion. This will be less than a week of Apple’s cash flow."
Logic: None! Apple makes $1 billion a week by avoiding running a bunch of minnow services with stronger competitors. Apple should buy X is a meme that needs to die.
https://news.ycombinator.com/item?id=22739839
'Buy this expensive Apple Phone you cannot own / overpriced not-professional-grade MacBook Pro, or else you have no good private search engine option.' (except for Qwant which is usable but not good)
Oh please, literally nobody outside of tech has heard of DDG, let alone would want to use it on their iPhone
So, at least they are trying to get more users (via billboard ads).
Leave ddg out of your empires. It's one of the few reliable and trustworthy services I use daily. I guarantee apple will just ruin it and help google dominate in the process. Thesr analysts don't get why people use ddg!
https://help.duckduckgo.com/duckduckgo-help-pages/features/i...
I think people who use DDG don’t get it’s mostly just bing’s search API with better branding and privacy features.
Which isn’t necessarily a bad thing, but it just makes DDG much more of a Microsoft acquisition target than an Apple one.
These so called “analysts” have no idea what they are talking about. Google pays Apple nearly $8 billion a year at this point to stay the default search on safari iOS.
Why would Apple throw away that free money to instead pay it back to Microsoft operating a business that can only be monetized by advertising?
I doubt search will ever be part of the Apple portfolio. Users won’t pay for it and Apple is not interested in becoming an ad network.
However, Apple are really bad at executing on cloud services of any kind. With any amount of resources there are certain things that company just cannot get right, and search is definitely one of them. I would love to know what it is organizationally that makes them so terrible at web apps and cloud services.
Wherever Apple sees any deficiencies, it works by secrecy, non-acceptance (or denial, like "you're holding it wrong", depending on the case) and creating its own way out of it without any or barely any acknowledgment of deficiencies (or wrong doing, as the case may be).
I personally believe that, more than having a search engine, Apple would be better off with an online maps solution (including navigation) that anybody could use, regardless of their hardware and OS. It has already opened up it's iWork suite on the cloud for everyone with a browser. Would Apple consider such a move with maps (though it's a very weak competitor in most countries outside the US)? I don't think so.
Also DuckDuckGo is nowhere close to Google's results for many intents and purposes (I know anecdotally many people find it extremely useful). Apple buying it would be a dead investment not just for this reason, but also because Apple doesn't really know how to manage and run certain online services well
If it isn't going to help sell some other product or service then I think that is unlikely.
but also because Apple doesn't really know how to manage and run certain online services well
That was certainly the case ten years ago, more recently they seem to have improved.
If I didn't know better, I would think DDG is trying to get bought...
That being said, DDG would be interesting as an acquisition for Apple because it would be consistent with Apple’s privacy-first approach to service design.
They say they store all your searches in their privacy policy (but "not in a personally identifiable way" they claim). They also say they effectively rewrite your search results to insert affiliate tracking.
Even if their entire stack was opensource and you had strong visibility and guarantees regarding the code they're actually running in production, adversaries could be exploiting DuckDuckGo and recording all the information you send to them "in a personally identifiable way". So, basically, don't trust DuckDuckGo. They're yet another for-profit middleman (maybe parasitic, maybe not, we don't know) that, through its centralized information accumulation, enables the sort of behavior you claim you want to avoid.
For example, they allow web blocking. But only opt-out web blocking.
- Apple should by netflix and get into the streaming game(considering how much appleTV stinks this may be a good idea!)
- Apple should buy Disney, there is the synergy of two trusted brands in the entertainment/media space(Steve Jobs did own Pixar which Disney now owns)
- Apple should buy twitter, they can expand their news and reach a large connected audience.
Things I think Apple should do:
Buy a large email provider, they had a yearly $100 a year email subscription service but that was a flop, make it free and make it iOS exclusive(as an alternative to gmail).
Buy Spotify, given they have iTunes getting spotify would make sense, perhaps antitrust issues with this one.
iTunes/Apple Music is incredibly healthy and the only reason to buy Spotify is to extinguish the biggest competition they have. There is no other benefit to them and it's a bad look aside from any potential legal issues.
Things I think Apple should do:
Something that other people aren't doing.
Extensively and seriously overhaul or eliminate their traditional computing business. (They are poised to do this and may very well in the coming years with their ARM on Mac strategy). I realize that the new Mac Pro is marketed to a very specific set of people but my latest iPhone cost significantly less than the wheels they will sell you for the Mac Pro. It makes no sense.
I don’t get Spotify. Spotify would cost $40B+ to buy after the premium they’d have to offer. Apple Music keeps growing its user base. Not sure if it would be allowed by regulators. There’s still Rhapsody in the west for music. Beyond that I don’t think any streaming service survived.
Again for the sake of competitiveness I wouldn’t want this to happen. I still miss Rdio’s design. Along with other things I don’t think Spotify or Apple Music really improved on since the Rdio, MOG, Zune music (forgot the name now) days, early Spotify, Rhapsody/Napster days.
Even if independent a company would have been a good investment doesn't mean that they would leave the damn thing alone and not ruin it in practice.
What Apple should do, along with others in the industry, is jointly create and fund a new search engine, based on non-commercial principles.
I'll quote an old HN comment:
> I don’t understand why Google’s competitors don’t form an
> independent search engine. If I were Microsoft, I’d talk to
> Apple and others to see if they would help fund a spun off Bing.
>
> The internet badly needs a big alternative search engine that
> isn’t beholden to advertisers or dependent on a single
> corporate owner.
>
> The benefit of such a search engine (whose main incentive is to
> just be a good search engine) is obvious for the public, but
> would also give companies who rely on their own OS, leverage
> against Google.If you think you can make $20B on ads and Microsoft charges you $15B for search access on that scale, why not just let Google pay you $7B and make more money?
It’s possible that Microsoft would charge less or that Apple could make more, but buying DDG doesn’t get them unlimited access to Bing’s results for one low price. I’m not implying that DDG doesn’t have any technology, but they are reliant on Microsoft for the hardest parts and there’s no guarantee that Microsoft would grant Apple as favorable terms when it’s not just a niche project, but a major competitor’s new foray.
I live in Mexico and even hardcore Apple fans don't use it here. It's either Waze or Google Maps.
As a part of this experiment, I also used Bing for two weeks before this and after a few days I could not notice that much of a difference to Google (one thing that annoyed me was Youtube videos playing inline on Bing).
But DDG is simply painful to use as much as I want to like it. I can not imagine it meeting Apple's product standards or having an Apple logo on what is the current DDG product. I also can not think of any IP that DDG has that would be interesting for Apple to own.
What it would do is give Microsoft all the leverage they need to negotiate (Give us a cheaper rate or use our API and pay us a similar rate?).
The article does mention an important detail that the so-called analyst fails to properly account for: from Google’s perspective, its opportunity cost—the amount of revenue it stands to lose if the deal were to be renegotiated adversely—is at least $25B. Google therefore has every incentive to maintain the status quo, or at least be allowed to offer to pay more than $8B to remain the default option on iOS.
Apple isn’t an ad company, I can’t imagine they’d make a significant amount of money releasing a general search engine just to have one.
As with twitter, I don't see much merit with this argument; Which goes like "If Apple decides to give away it's revenue stream from X, decides to go with Y which provides inferior service, if Y decides to shut its shop, So Apple should buy Z which doesn't generate as much revenue as X or Y"!
Maybe creating privacy-oriented search engines is actually a profitable venture as it seems inevitable someone on the opoposing side will eventually buy you out.
These online ad investors are so aggressive I expect Pi-Hole will one day be a target.
But having to switch names, even to something completely different, would be manageable, I'm sure.
They're based on real world examples retaining recognizable parts of the original name: Owncloud -> Nexctloud and uBlock -> uBlock Origin.
Of course it's not impossible to get a new name, but it's easier branding-wise staying close to the old one.
I prefer one more search engine available to everyone, not one less.
My impression is that the idea of Apple buying DDG is fictive, am I hallucinating or does that seem to hold water?
> DuckDuckGo has been a profitable company since 2014 without storing or sharing any personal information on people using our search engine.
and
> As mentioned, DuckDuckGo is profitable based mostly on keyword-based search ads, though we have always been on the search for other ways to anonymously make money so that we can reduce the dependence on advertising.
Just because apple makes plenty of money doesn't mean they should buy every random startup.