Apple Builds Its Own Search Engine?

Filed in archive Business News on April 19, 2010

Top Apple analyst Gene Munster of Piper Jaffray there is a 70 % chance Apple will create a mobile search engine tailored for its iPhone within the next five years. As the search provider for the iPhone, Google sees what iPhone users are searching for, which can help it tailor software and services for its own mobile smartphones. This competitive advantage has not gone unnoticed by Apple. Building its own iPhone-centric search engine would help Apple shield Google from its App Store data, Munster said.

Gene writes:
"We believe Apple could utilize data unavailable to Google, data generated by the company's App Store, to create a mobile centric search engine, which would be a unique offering to Google's search engine.

An iPhone specific search engine could be a difficult undertaking, but we feel Apple could make a minor acquisition of a search company that has built a web index, like a Cuil, and utilize the index as the base for building its own engine.

We believe the odds of Apple developing a search engine in the next five years are 70%. One hurdle for Apple in developing its own search engine would be generating enough advertiser interest to form a competitive marketplace; however, we believe the rationale for an Apple search product is to protect data rather than generate profit."


Data Apple collects about users from its vaunted iPhone is so valuable that the company must build a special search engine just to keep Google from gleaning insight from that data, analysts say.

Google is currently the default search engine on the iPhone, which has tens of millions of users. Pairing the leading search engine-65 percent in the United States, more share abroad-with one of the most popular smartphones on the planet made good business sense.

However, Google has increasingly encroached on Apple's mobile turf, offering the Android operating system and several mobile applications.

That data is the most important aspect of the (increasingly strained) Google-Apple relationship. With Google Maps and search on the iPhone, Gene thinks Google gains valuable insights into mobile consumer behavior. Google can then use this data to improve its own mobile products as fast as Apple, if not faster.

As the search provider for the iPhone, Google also sees what iPhone users are searching for, which can help it tailor software and services for its own mobile smartphones. This competitive advantage has not gone unnoticed by Apple.

Building its own iPhone-centric search engine would help Apple shield Google from its App Store data, Munster said in a March 30 research note.

Apple lacks the experience and engineering wherewithal to build a large, scalable search engine. There are alternatives to Google such as Microsoft Bing, which was rumored to replace Google on the iPhone. With Google the default search service on Apple's newly released iPad, it seems unlikely that Apple will in fact replace Google with Bing or anything else on the iPhone.

But he said that Apple could buy a search startup with a Web index, such as Cuil, using its index as the seed for its own search engine. Mobile search startup Taptu would also be a good possibility for Apple because it focuses its index on touch-enabled Websites. Apple would then have to stimulate enough advertiser interest to make a viable search product work for it.

While Apple excels at marketing new products, it is not a digital advertising provider. The company did buy AdMob rival Quattro Wireless, but the company has yet to reveal what its intentions are for those assets.