Could A Yahoo-Apple Deal Spell Trouble For Google?

By: Chris Crum - April 14, 2013

The competitive landscape surrounding Google gets more and more interesting by the day. Now two of its rivals, one of which is being run by someone who probably knows Google’s inner workings more intimately than most of its current employees, are talking about teaming up.

Apple and Yahoo are said to be in talks about possibly integrating Yahoo products more into iOS, the the operating system powering the iPhones, iPods and iPads in millions of hands.

Should Google be worried? What would you like to see out such a partnership? Share your thoughts in the comments.

Any increased integration of Yahoo into iOS would only add on to existing Yahoo Finance and weather data that come on the operating system today.

The Wall Street Journal is reporting that the two companies have been “discussing how more of Yahoo’s services can play a prominent role on Apple’s iPhone and iPad devices,” citing people briefed on the matter. Such possibilities could include, according to the Journal’s sources, “more content from Yahoo News and its other web properties loaded onto Apple devices or available through an expanded Siri partnership.”

A deal is not imminent, the report says.

The Journal isn’t the only publication with sources talking about this. Bloomberg cites “a person familiar with the matter” as saying executives from both companies have “discussed ways to collaborate more closely on mobile software”:

Yahoo Chief Executive Officer (and longtime Googler) Marissa Mayer has met with Eddy Cue, Apple’s senior vice president of Internet services, to explore ways Yahoo can be more deeply integrated into the software that runs on the iPhone and iPad, said the person, who asked not to be identified because the talks are private.

Mayer has been very clear about how important mobile is to the company’s strategy going forward since she took over as CEO last year. This would obviously be a huge step in making sure smartphone users are accessing Yahoo content on a regular basis. Depending on what kinds of integrations we see, it could turn out to be a pretty big deal for Yahoo’s piece of the search market as well, and would give Yahoo an interesting partner should the Microsoft alliance fall apart.

The part about Siri is particularly interesting, and that could mean any number of things. One thing it can at least enable us to imagine is a search-related partnership. Yahoo, of course, outsources its search to Bing on the back-end, but Yahoo’s relationship with Microsoft seems to be souring. Apple’s with Google, meanwhile, is too.

Yahoo has expressed how important search still is to it as a company in recent months, and now they have one of the biggest names in the search industry running the show. It was a different story when Yahoo went the Bing route.

The Motley Fool even makes an interesting case for why Apple should (but probably won’t) just buy Yahoo. “Yahoo! already provides some of the default iOS apps for stock quotes and weather. Perhaps more importantly, Yahoo! isn’t Microsoft or Google,” writes Rick Munarriz. “Mr. Softy and Big G are Apple’s two biggest rivals, though these days Google has become the bigger enemy as Android conquers the smartphone and now tablet markets. Apple tried to distance itself from Google last year, going with a homegrown default solution to Apple Maps.”

“Right,” he continues. “We know how badly that played out for Apple. Any bone that Apple could throw Yahoo! is one less bone that it would either throw out to Google or possibly mess up on its own.”

I don’t expect any acquisition announcements to be made anytime soon, but it’s interesting to consider.

Even with the right partnership between Apple and Yahoo, Google could suffer significantly in terms of search market share. Let’s not forget that Yahoo used to rule the search space, and now it has a seasoned veteran from the current king of search running the show. What if iOS made its way to using Yahoo as the default search? How many would bother to change it to Google?

Google and Apple have had a search deal in place for about a decade. Few details are known about this deal. Greg Sterling at Search Engine Land recently shared a couple of analysts’ theories:

An analyst at Macquarie Capital estimated that Google was making $1.3 billion annually in paid search revenue from iOS devices. Macquarie speculated that Google returned about $1 billion of that to Apple as part of the agreement that made Google the default search engine on the Safari browser….Another financial analyst has come up with a similar annual estimate of the value of Google’s default iOS search deal with Apple: $1 billion. Morgan Stanley’s Scott Devitt is responsible for the new estimate…Devitt disagreed with Macquarie, arguing that the structure of the relationship is probably not a “revenue sharing” deal but instead a straight fee-per-device payment from Google to Apple. Devitt believes that Google pays Apple roughly $3.20 per iOS device, which would avoid the accounting issues arising from a revenue sharing agreement.

Sterling himself wrote, “While it’s extremely unlikely that Apple would try and make Siri into a full-fledged search engine, it could significantly beef up Siri’s content search and discovery capabilities. In that capacity, Apple might be able to siphon off selected commercial queries in key categories such as local, travel and entertainment.”

As we have discussed repeatedly, including in this recent article, the biggest threat to Google’s search market share is the gradual chipping away at it by various vertical services. Even if Yahoo only supplied some of the content on Siri (regardless of whether it became the actual default search on iOS), Siri could continue to improve with increased integration across other services, and rendering Google less of a need for users, little by little.

Obviously, how this really plays out is anybody’s guess. Apple and Yahoo may not even expand their partnership at all, when it’s all said and done. Still, if I were Google, I might be a little nervous about what these companies are discussing.

Should Google be worried? Let us know what you think.

Chris Crum

About the Author

Chris CrumChris Crum has been a part of the WebProNews team and the iEntry Network of B2B Publications since 2003. Follow Chris on Twitter, on StumbleUpon, on Pinterest and/or on Google: +Chris Crum.

View all posts by Chris Crum
  • Howard Deutsch

    Apple would do well to build a strong content relationship with Yahoo. It would strengthen Apple’s offerings while also increasing Apple’s competitiveness with Google.

  • Grey Olltwit

    Comparing the cost of iPad/iPod with similar Android devices i.e. Google devices, the latter are so cheap now I can only see them dominating the market and Mac losing out unless they make theirs more affordable.

  • James Lewes

    Discussions that compare smart phones and market share ignore an important factor playing to Apple’s advantage. The whole range of iMobile devices has shifted from their utility as objects to becoming an indispensable fashion accessory.. This may not seem important in discussions of market share but I would suggest taking a walk around any neighborhood in any American city and simply do a head count of the number of android devices you see people under the age of 30 wearing and using then compare that to the number of iPhones, iTouches, iPads etc.

  • Andria Gaskin

    I think that Google should be worried. I also think that this kind of competition is necessary, and always a very good thing for consumers.

  • Ron

    Absolutely. The Google Giant needs to face some “real” competition so that the internet landscape can become more democratic. (Same thing goes for Amazon.)

    • Jerry Witt

      “Google is too big and too powerful, well intrenched into their field of expertise. It is a global powerhouse and everyone identifies themselves with Google and it is only that Google gives results.”

      Now change “Google” for “Microsoft”. This is exactly the statement you would hear in 1990.

  • Taurus

    Yahoo and apple are “has-beens” re-incarted from the dumps. Google is too big and too powerful, well intrenched into their field of expertise. It is a global powerhouse and everyone identifies themselves with Google and it is only that Google gives results.

  • Joe

    Was this article written by a third-grader?

  • Yudiono

    I think Google should be worried because Yahoo+Apple is big competitor. :)

  • David

    Not a problem for Google as far as I’m concerned…….I dislike Yahoo & Apple both INTENSELY!

  • Steve K

    The more change we see, the less change really happens. Last time I checked, Microsoft still owned 1/3 of Apple’s stock, Bing is a Google scraper and Yahoo! is a Microsoft “partner”, so it’s all one big happy incestuous corporate family: The brands politely agree to divide the market among themselves, while pretending to be at war to keep all their product offerings “fresh and exciting” – and, of course, to exclude up and coming competitors from the market.

    Nothing to see here, folks. Move along…

  • Alan Leenhouts

    Won’t change my using Android phones and tablets. I don’t think bing or Yahoo are a real threat to search for Google.

  • Sharon Jackson

    What is not being considered and perhaps it is not as important as I think, is customer loyalty. I like Google. I don’t like Yahoo. I recall in the bad old days before Google, There was Netscape and Lycos and Yahoo and a few other brrowsers, that had such bad parameters, that if you typed in, “pictture of a puppy,” you wwould get hundreds of results such as,
    Sluts with puppies
    Naked women with puppies
    Naked men with puppies etc etc

    The results were so porn riddled, it was hopeless. Along came Google and suddenly you wwould have lots of puppy pictures and no porn. I have been grateful ever since. And Google still does the best searches IMHO

  • Angela

    Google wins, it’s the McDonalds of search engines. Plus, it’s the most fun saying “google”.

    • Ian Smith

      “Google wins, it’s the McDonalds of search engines” – poor old Google then. I never thought the search engine was that bad.


    Well I think apple needs to really think about jumping into bed with Yahoo. If trying to get an email account restored with yahoo takes 4-5 weeks. With the biggest phone and website circus that takes you no ware it is one of the biggest faceless companies on the planet and its customer communication is like a night on elm street. ask any client that’s email system is out sourced to Yahoo. refers issues back to the main company who refer back to yahoo. and when you contact yahoo. through the system they refer back to to the ISP it supports one great big circus.

    I advise all clients to move to Google and have Google as their home page Yahoo takes so long to load and is crap.


  • George

    I personally think Google should be worried. This is because in a big merger of this magnitude, the customers will eventually reap the spoils. Google is getting too smart for their own good. By screwing most of their loyal customers in favor of the big companies who can afford to pay big bucks. They are biting the fingers that feeds them.

  • IM

    It would be nice to see Yahoo! reinvent themselves and become a better search engine among other things. I thought the partnership with Microsoft/Bing search would increase their search market share a great deal more; apparently that hasn’t happened.

    If a mobile/search partnership deal between Yahoo! and Apple could be made, though I rather see Apple or some other company buy Yahoo! outright, I find it it hard to believe Google will face a major foe in search.

    However, if other web companies including Facebook and Bing can chip away at Google’s big chunk of the search market share more, it could even the playing field or come close – something I look forward to.

  • Nina

    Competition is what drives innovation. So why should it matter to Google if Yahoo and apple decides to team up. All they need to do is to fill up what is lacking in Google. It is up o Google to figure out the best way to retain its dominance. All these will lead to is better services and products for consumers.

  • jam

    Well, Google still the best

  • Miftah Habibi

    A little bit of worry is needed. But, Google is the best one.

  • techteacher

    My basic problem is that Apple is thinking about changing the deal they have with Google to Yahoo because of one person, Marissa Mayer. Are they going to follow her wherever she goes? I like and use Google. I have never cared for Yahoo.