Apple won’t buy an AI-powered search engine, says Morgan Stanley
Apple is likely relieved at the judgement in the Google case, as it means it will still be able to take money from Google for search, and gets to renegotiate that deal on an annual basis. It’s a good outcome for the company, says Morgan Stanley analyst, Erik Woodring.
Business more or less as usual
In his Google remedy ruling, Judge Amit P. Mehta ruled that “Google will be barred from entering or maintaining any exclusive contract relating to the distribution of Google Search, Chrome, Google Assistant and the Gemini app”, but that “Google will not be barred from making payments or offering other consideration to distribution partners for pre-loading or placement of Google Search, Chrome, or its GenAI products.”
What that means is that Google can no longer be Apple’s exclusive and default search partner for multiple years, but Apple can continue to gather payments from Google and others to distribute search, with default placement renegotiated annually.
The scale of those payments is estimated to be c.$25b.
Don’t expect an Apple search engine
There are several take-aways but the biggest might be that the case showed “Apple is ‘actively looking at’ adding a GenAI product as a search option in its Safari web browser and expects to do so in the coming year.”And may partner (non-exclusively now thanks to the judgement) with Google Gemini to do so.
But the one more thing is that the decision, “should lay to rest the belief of some that Apple needs to buy an AI-powered search engine; it’s not going to happen, in our view,” said the analyst. “It doesn’t need to.”
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