That Samsung considers doing without Google is a brutal change in the industry. One of unforeseeable consequences

Google seemed impregnable. Its search engine has been dominating a market for a quarter of a century that has become extremely lucrative for this company: only in 2022 the value of that division was 162,000 million dollars.

However the launch of ChatGPT could pose the first real threat to Google’s stranglehold on this arena. According to The New York TimesSamsung is considering replacing the default search engine on its mobiles and move from google to bing. The impact of something like this would be remarkable, but the repercussions could be even more significant.

How Google makes money

Google is known as the search giant for a reason. It has been an absolute benchmark in this market since the late 90s, and over the years its position has only strengthened despite the fact that its rivals have tried to compete with it.

Currently its market share is 93.17% according to data from StatCounter GlobalStats. Bing, at least until March 2023, was not even 3%, but even with that small share, Microsoft’s ad revenue from that business division is about spectacular 10,000 million dollarsand that is precisely one of the reasons why the Redmond company is now betting so heavily on ChatGPT and integrating it into Bing and other products.

In fact, Microsoft expects that every 1% of share it steals from Google—if it steals it at all—represents an increase of 2,000 million dollars more on its income statement from the advertising division.

Google’s business model, advertising, is present in all its products, but it is especially noticeable in its search engine. The google.com website was by far the most visited by Internet users in 2022 with more than 85,000 million visits, above the 33,000 million of YouTube and well above the 17,800 million of Facebook, the 6,800 of Twitter or the 6,180 million of Instagram according to Forbes.

And on each of those visits, Google presents more and more advertising, with promoted results that allow the advertiser to take a commission. The business works on PCs and laptops, but it is especially important on that device where we do almost everything today: the mobile.

Precisely for this reason, Google has maintained agreements with software companies for years (like Mozilla, responsible for Firefox) and hardware, as well as mobile phone manufacturers. The company pays those manufacturers a certain amount of money each year to make sure that the default search engine that appears on those devices is Google’s.

It is true that later the user can choose another search engine (Bing, DuckDuckGo, etc.), but the fact that the manufacturer already places it “as standard” makes the user experience be for many the expected and expected. It’s the de facto standard and it looked like it would stay that way for many years to come, but that could change now.

Samsung plans to say goodbye to the Google search engine

According to IDC, in 2022 Samsung distributed 261 million of mobiles. In 2021 the figure was somewhat higher, 272 million. All of them governed by Android, and all of them with the Google search engine configured by default. It is one of the manufacturers that sell the most in the world, and in fact according to 2020 data there are close to 1 billion active Samsung devices. An atrocity.

Every time a user searches for something on these phones, they do so through Google, and this allows the company to enter small commissions for the advertising displayed in the results. And users look for many things a day on our mobiles. We do it constantly.

With so many millions of users making several searches a day, it is easy to understand that this agreement is very beneficial for Google, which according to published estimates in The New York Times it enters around 3,000 million a year in advertising displayed on Samsung mobiles through its search engine.

The relationship between Samsung and Google has always been dotted with potholes. The South Korean company came to promote the development of Tizen for mobile phones as a clear plan B in case things failed with Android. That platform has ended up being used for other products and, for example, it merged with Wear OS two years ago to reinforce the features of Samsung smartwatches.

In 2017 it is estimated that Google would pay $3.5 billion to Samsung to be the default search engine on their devices. A few months ago, the US Department of Justice indicated that Google paid “billions of dollars each year to Apple, Samsung and other telecommunications giants to illegally maintain its number 1 position as a search engine,” they explained. in Bloomberg. Quantities were not specified, but

In 2020 the Mountain View company negotiated with the South Korean to try to promote Google Assistant over Bixby, the own assistant that has ended up being used especially home although it continues earning benefits on mobiles.

Now the situation seems more delicate than ever, and that Samsung replaces Google with Bing is not only dangerous for Google at an economic level: this could only be the first of many manufacturers who make that same decision.

In fact, there is a clear protagonist in this scenario. This is Apple, the company that with its iPhone and the rest of its products is an absolute reference for millions of users around the world, and that has also spent years maintaining a singular alliance with Google —rival in almost everything— to use its search engine on your products.

The NYTimes article pointed out how Samsung is considering switching from Google to Bing, but Apple has to renegotiate that same deal this year. Will the change also be considered?

Google and Apple, a strange and very profitable alliance for both

Google pays Apple real big bucks every year. There is no official data, but over time data has leaked that allows these agreements to be sized. It is known, for example, that in 2010 Google paid more than 100 million dollars a year to Apple for the company to use the default Google search engine in its products.

In 2014 it was published that he had paid 1 billion dollars to Apple to keep its browser as the default browser on iOS in the United States, a figure that had not apparently changed from the previous year.

In 2021 Forbes estimated that Google would pay Apple 15,000 million to remain the default search engine in Safari (on both macOS and iOS). That medium pointed out that in 2020 it had paid 10,000 million —other sources say that 12,000—, while in 2017 it had paid 3,000 million. The following year Goldman Sachs estimated that these payments had risen to 9,000 million of dollars.

The figures dance and do not always reflect whether these amounts are focused on the United States or globally (as the latest data usually does). Back in 2020 it was revealed that Google had paid $1.5 billion to be the default search engine in Safari… UK only. What is clear is that this agreement has not stopped growing: it is estimated that in 2022 Google paid between 18,000 and 20,000 million dollars to Apple for keeping the agreement.

Already then, analysts revealed that Apple’s iOS devices contribute “about 50% of income mobile search on Google”, which of course shows how crucial that losing such a deal would be terrible for the company. All these years the deal has been very beneficial to both companies, of course, but that could change in the future. future.

Can Microsoft threaten that position and convince Apple to replace Google with Bing? As indicated on Business Insiderthe truth is that Microsoft has 100,000 million in cash to spend if you need it, so if there is someone who can compete with Google in that regard, it is Microsoft.

In fact, that already happened (a bit): in 2010 Apple and Microsoft they began to negotiate about that possibility, and when Apple announced iOS 7 in 2013, did with the surprise that Bing would be the default search engine in Siri. The agreement would stand until 2017.

It does not seem that there are currently any conversations in this regard, but in January 2023 another even more disturbing possibility arose for Google and Microsoft: that Apple dispenses with both and integrates your own search engine.

Sources close to the company spoke then that Apple has been working on the so-called “Apple Search” for some time, a tool that would allow “billions of searches” per day. For some analysts, this option would allow Apple to have a search engine that, even without being as advanced as Google’s, would allow it not to depend on that search engine.

That would be an equally terrible blow to Google’s search and advertising business. One that seemed impregnableand that now it doesn’t seem so much anymore.

Image: daniel romero

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