Microsoft’s Bing has recently undergone artificial intelligence-related changes that have caught the attention of Google. Although it is unlikely for Microsoft to dethrone Google’s dominant position anytime soon, these alterations might force Google to pay more to secure its spot as Apple’s default search engine.
The iPhone’s mobile operating system, iOS, currently features Google as its default search engine.
Bing, a search engine developed by Microsoft, was launched in 2009. It has struggled to gain significant market share against Google, the search engine giant. Google, a subsidiary of Alphabet Inc., was founded in 1998 and has since become the world’s leading search engine.
Microsoft’s Bing May Force Google to Pay Up
According to Barclays analyst Ross Sandler, Microsoft’s Bing could potentially force Google to pay more to maintain its default search engine status on Apple’s iOS. If Microsoft is involved in negotiations for the default search engine position, Sandler believes that Google is likely to pay more for the spot than it currently does. He estimates that every five points of TAC (Traffic Acquisition Cost) rate increase could result in a 3% impact on Google’s operating income.
Google generates approximately $46 billion of its $78 billion operating profit from iOS, through both Safari and the organic iOS channel. Sandler considers the possibility of Bing replacing Google as Apple’s default search engine as “unlikely,” but if it were to happen, it could have a significant impact on Google’s operating income, reducing it by as much as 11%.
The analyst also states that if Bing were to replace Google as the default search engine in Europe, the Middle East, and Asia, it could lead to a 7% reduction in Google’s operating income. Changes in the UK and Latin America could result in a 1% impact, assuming Google doesn’t recapture any lost queries.
A More Competitive Environment in Search
Sandler acknowledges that while including Bing in the negotiations might not resolve regulatory concerns, it could create a more competitive environment in search. He notes that Apple has every incentive to maximize the value of its position in the market.
As Microsoft’s Bing continues to improve and evolve, it is becoming a more formidable competitor in the search engine market. Whether or not Bing can ultimately replace Google on iOS remains to be seen, but the competition between these two tech giants is sure to benefit consumers by driving innovation and improvements in search technology.
