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Is Apple Dropping Google? What Does That Mean For Your Business? (Thinks Out Loud 460)

Screenshot of Google's home page with a big red X through it to illustrate the idea of Apple dropping Google

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According to Search Engine Journal, Apple might be thinking about replacing Google with ChatGPT or Perplexity as its default search engine in Safari. I know, I know, it sounds crazy. How in the world could Apple drop Google?

Well, whether Apple dropping Google is likely or not isn’t the point.

Instead, the point is that while any one member of Big Tech could (at least in theory) get pushed out of the club at any time, Big Tech itself will continue to roll right along. And that gatekeepers gonna gate, whether those gatekeepers are the companies we’ve competed with for years, or some new player in the game.

As the saying goes, though, don’t hate the player, hate the game.

Remember, your business probably depends on Google for a lot of your traffic and revenues. And Google clearly cares enough about the traffic Apple provides it that they’re willing to pay roughly $20 billion each year for the privilege of being the default search engine. If Google loses Apple’s traffic, what happens to yours?

Again, the point isn’t whether this is likely. The point is that you’ve got to change the rules of the game. You’ve got to ensure you’re not dependent on any one Big Tech player for traffic and revenue

Why does that matter for your business? And what can you do about it? That’s what this episode of the podcast is all about.

Want to learn more? Here are the show notes for you.

Is Apple Dropping Google? What Does That Mean For Your Business? (Thinks Out Loud 460) — Headlines and Show Notes

Show Notes and Links

You might also enjoy this webinar I recently participated in with Miles Partnership that looked at "The Power of Generative AI and ChatGPT: What It Means for Tourism & Hospitality" here:

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Recorded using a Shure SM7B Vocal Dynamic Microphone and a Focusrite Scarlett 4i4 (3rd Gen) USB Audio Interface into Logic Pro X for the Mac.

Running time: 17m 21s

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Transcript: Is Apple Dropping Google? What Does That Mean For Your Business?

Welcome to Thinks Out Loud. I’m Tim Peter.

There was a wild news story this week for folks who are interested in marketing and customer acquisition beyond Big Tech. According to the Search Engine Journal, Apple may add artificial intelligence search engines to Safari as Google use drops. Apparently, Apple is exploring AI search engines like ChatGPT for Safari. This is all from Search Engine Journal, signaling a shift from Google’s $20 billion deal.

How will this reshape search competition?

Well, this is, to use a technical term, a big effing deal. Seriously, this is massive. Why is this a big deal? Why do you care? How does it potentially reshape what Big Tech means? And most importantly, why does this matter to you and to your business?

This is episode 460 of the podcast. Let’s dive in.

As Search Engine Journal’s headline probably reminds you, Google pays Apple something like $20 billion to be the default search engine in Safari and on iOS overall, on your iPhone and iPad’s operating system. You might also remember that the Department of Justice, the US Department of Justice, wants to prevent Google from paying anyone to be the default search engine as part of its proposed antitrust remedies.

Now to put this in context, $20 billion is a little bit less than Apple makes in profits most quarters. Or to put it another way, it’s essentially a full quarter’s worth of risk-free profit to Apple.

That is a big deal right there.

In part, this story feels a bit like a negotiating ploy on Apple’s part. For instance, Bloomberg has said that it’s Apple’s way of showing the Department of Justice they don’t need Google to pay them in hopes probably that the court will still allow Google to pay them. They want to make sure that they still get that full quarter worth of risk-free profit every single year. And that seems entirely plausible to me.

It also could be Apple presenting its asking price to one of the big AI players like ChatGPT or Proplexity. know, Apple could be saying, you want to get in front of our customers? You got to pay us. Remember, “gatekeepers gonna gate” even if it’s a gatekeeper like Apple charging another potential gatekeeper like ChatGPT or Perplexity. In other words, if the courts say that Google isn’t allowed to pay to be the default, Apple may be keeping its options open so that somebody else will pay to be the default.

And in any case, Apple apparently is going to add AI search as alternatives to Google regardless so that you can say, “You know what, I’d like to use ChatGPT or I’d like to use Perplexity instead of always using Google or Bing or Duck or one of the other ones.”

The question I think we need to start thinking about though is what if Apple doesn’t use AI as the alternative, but instead get ChatGPT or Perplexity to pay them the $20 billion? What does that mean to you?

As you’ve heard me mention many times before, any decline in Google’s business could lead to a huge decline in your business. Google accounts for a plurality, if not an outright majority, of many businesses’ traffic. When you think about organic search or paid search or local search and maps or metasearch in hospitality or product search in retail, those add up to a lot of traffic and a lot of revenue for most businesses. So much so that Google clearly wants to be the first choice on Apple. Otherwise, they wouldn’t be paying $20 billion a year to be there.

And the way you want to think about that is that if Apple is important to Google, then Apple is important to you too.

Let’s talk about how important that is. Just back in the envelope for a moment, Google made $350 billion in revenue last year and just a bit over $100 billion in profits. They paid Apple something in the ballpark of $20 billion to be the search by default in Safari on Macs and iOS. Now that $20 billion is about 6% of their overall revenues, which means if we’re doing this in an ROI calculation way, they had about a 16.5:1 ROI. In other words, for every dollar Google paid Apple, they made $16.50 in profits, at most.

In reality, it was lower than that because it assumes that everyone who clicked on an ad, everyone who used Google clicked on an ad and it also ignores the ads “only” accounted for 54% of Google’s earnings. And for those of you listening to this, I hope you heard the air quotes around “only.” 54% is a huge amount of traffic and a huge segment of Google’s business. It’s just in this case, that would mean that Google’s ROI from their deal with Apple is smaller than a 16.5:1 return.

So if we take the fact that ads account for 54% of Google’s earnings, then the real ROI was no better than 54% of 16.5:1, or maybe 8.9:1. We’ll round up and call that 9:1. And there would be nothing wrong with an ROI.

But wait, there’s more.

Customers don’t click on an ad every time they use Google search. Assuming customers only click on an ad, maybe between a third to half of the time, and it could be more than that, it could be less than that, but it would make Google’s actual ROI probably more like three to one to maybe four and a half to one.

I think it’s probably lower than that. Again, that’s still not a terrible number though.

But if you flip it around, it could mean is that Apple could account for a huge share of Google’s revenues and a huge share of Google’s profits and a huge share of the traffic that they get that matters to them. And what it all demonstrates to you is how much Google needs that traffic. Remember, Google represents a healthy chunk of your traffic. And if Google needs that traffic, so do you.

Up until recently, the potential hit to your business from a decline in Google search was one of my major concerns. And it was a driving factor behind my upcoming book, Digital Reset: Driving Marketing and Customer Acquisition Beyond Big Tech. Obviously, one of the things we have to remember is if that Apple share of that traffic goes away, that’s an even bigger problem for you because that will happen immediately.

So this remains something you need to think about.

What’s also true is that there’s another huge, highly related concern here. And that is, what is your brand experience? What do customers know about your brand if they don’t come to your website? Whether they, Apple, replace Google with Perplexity or ChatGPT, or something else happens, which I’ll talk about in a moment.

You may still have people who don’t experience your brand early in the process. Now you might think, “Yay, Google isn’t my biggest concern any longer.” That sounds good in the theory, except there’s a few issues that are big concerns that come from that.

One, you’d have to show up in ChatGPT or Perplexity’s answers for customers to find you.

Two, showing up in ChatGPT and Perplexity and other AI answer engines often don’t lead to clicks. The same is true for Google’s AI overviews, by the way, and in its AI mode that they’re testing with power users right now.

The third issue is that you’d also simply be trading one Big Tech gatekeeper for another.

And the fourth thing is that until one of those Big Tech wannabes won, whether it was Google, whether it was ChatGPT, whether it was Perplexity, your company could lose out on a lot of traffic and revenue.

Is that bad? Because it seems like it’s, you bad. The worst part is that it’s pretty likely we’re heading to that world one way or the other. It doesn’t matter if it’s zero-click search today—which we’re already seeing—or AI answer engines in the future, or AI agents in the future. We’re probably going to see fewer and fewer clicks.

My friend Stuart Butler talked about this brilliantly in his Destination Discourse podcast not long ago. And I think there’s a lot of merit in how we think about this.

The question we need to start thinking about, which is, what is brand experience if customers never come to your branded assets?

You know, “don’t build your brand on rented land” is great advice. It’s a key point in digital reset. We talk about how you do that. And I think that it still holds up. You know, the people who connect from your branded assets like website, email, SMS, and other CRM activities are going to be huge for your business for a long time to come.

My concern increasingly though, and the Apple story points to it and all this rest we’ve talked about points to it, is what happens if those branded assets don’t happen earlier in the process? Or worse, what if they don’t happen at all? I’ve argued, I still argue, that your website isn’t going away anytime soon. I think that’s going to be true for quite some time.

I also think we need to ensure that our branded experiences deliver that they connect right out of the gate every time whenever someone does engage with them. It doesn’t mean that they have to purchase. It doesn’t mean that they have to opt into everything. But they do need to connect. They do need to feel some affinity for your brand.

We need to be thinking about how brand works when people interact with those messages and when they interact with those channels.

I recently heard somebody who put it best when he said, “We implemented demand marketing, which only addresses the 10% of the audience that is ready to buy. We need brand marketing for the remaining 90% to stay so that we stay top of mind until they are ready.”

Brand is the sum of every experience our customers have with our business. And that includes our website or our email or our SMS messages or our content or our social presence or in real life presence. And yes, the experiences they hear about from creators and influencers or in search and AI answer engines. We need to remember that it’s OK for customers to find us through some other source the first time they come across our name, anyway. You know, even Google thinks it’s worth paying $20 billion a year so that they show up on Apple the first time somebody, I don’t know, looks to search. You’d think Google would have that one covered already.

Where it becomes a problem for your business, is if you have to pay every time customers connect with you. So we have to think about how we build the brand every time we have one of those touch points.

Now in the interest of time, I’m not going to belabor the point of how you solve for that right now. I’m not going to ignore it. I just want to hit on it at a high level. You’ve heard me say this before.

First, focus on what won’t change. And we know that what won’t change is that content is king, customer experience is queen, and data is the crown jewels. And I will provide a bunch of links in the show notes for past episodes where I covered how you use those in detail. I will admit we also don’t want to go too deep into detail at the moment because you can read about it in the new book if you’d like. I just remember that you can learn a bunch of this from links on this episode. You don’t have to buy the book when it comes out, though I hope you want to. Just keep in mind that this is a rapidly evolving space.

Google and Apple are showing why it’s possible even for Big Tech companies to lose and to have new folks take their seat at the table. Your job is to make sure you succeed beyond Big Tech. Keep learning about the situation. Keep thinking about what does it mean when guests and customers connect to us.

Your job is to make sure you succeed beyond Big Tech. Your job is to keep thinking about what’s going to happen, how we continue to build a brand if people don’t connect with us the first time directly.

And that some of the ways that you can do that is to:

  • Focus on what won’t change.
  • Focus on the reality that content is king.
  • Focus on the reality that customer experience is queen.
  • Focus on the reality that data is the crown jewels.

Apply those lessons, learn from them, and then share your learnings with your friends and family and fans and followers too. I know for sure I’d love to hear what you think and I bet they will also.

I’m confident you’re going to crush it and I can’t wait to see how you put this to work for your brand and business.

Show Wrap-Up and Credits

Now, looking at the clock on the wall, we are out of time for this week.

I’m willing to bet that you might know someone who would benefit from what we’ve talked about today. Are you thinking of someone? Why not send them a link to the episode? Let them know what you think too, as I just mentioned. Share what you’ve learned.

You can also find the show notes for this episode, episode 460, as well as an archive of all of our past episodes, by going to timpeter.com/podcast. Again, that’s timpeter.com/podcast.

And, of course, be sure to like and subscribe wherever you get your favorite podcasts.

Thank you so much for listening today. I want you to know that this show would not happen without you. We’ll be back with a new episode next week. And until then, please be well, be safe, and as the saying goes, be excellent to each other. Take care. We’ll talk to you soon.

Tim Peter is the founder and president of Tim Peter & Associates. You can learn more about our company's strategy and digital marketing consulting services here or about Tim here.

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