
Apple Should Buy a Search Engine, Analyst Says - asimpletune
https://www.barrons.com/articles/apple-should-buy-a-search-engine-analyst-says-51591642347
======
mehrdada
Let’s unpack this somewhat misguided commentary:

First, Apple is building a search engine, in a non traditional sense, by
providing a first level of results directly via Safari suggestions and
Spotlight/Siri on client devices. That layer gives them enough ability to
capture specific verticals should they find them profitable.

Second, and more subtle question, would be whether to become a full-fledged
player in this space. Apple, of all tech companies, seems to care the most
about the bottom line and does not go about reckless dick-measuring contests.
Building search is hard, and it is questionable that Apple in the medium term
would be able to profit more than it already does from Google search. At very
least this would be a can of worms they open with unknown profitability. Note
that to make money off of search you have to also build the ad side of things
and then try to compete with Google who owns the rest of the ecosystem and has
levers to undercut you. It’s even possible that the current arrangement is
more favorable to Apple, as Google indirectly benefits by preserving their
monopoly and may be willing to pay even more than that particular transaction
should be valued independently.

Where owning the search space matters to Apple most is the option value, and
Apple so far has a cheap way to do it (Microsoft had been paying the costs).
In addition, Apple has been minimally boosting DuckDuckGo by giving it some
free exposure for the just-in-case scenario.

My take is Tim Cook is going to watchfully wait and let this play for as long
as possible while ensuring they have enough leverage to keep Google paying up,
instead of pulling another Apple Maps.

Right now the focus is to take some Android marketshare mid-market and sell
some services there. Once they own quite a big chunk of client devices,
perhaps it will make sense to give the middle finger to Google.

P.S. all of this is especially true now that Pixel has failed to capture any
meaningful share of the high end iOS market to be a real threat for Apple.

~~~
dionian
I agree, Apple is not an advertising company, and free search engines business
model seems to be ad related

~~~
tinus_hn
The current agreement in a way puts Apple at the mercy of Google.

DuckDuckGo (with a better name and more polish) could be an Apple product. It
wouldn’t be that expensive to buy and they don’t need to put as much ads on it
as Google does, they only need 30% of income to make as much as they make now.

I wouldn’t be surprised by such a move.

~~~
dogma1138
DDG is dependent on Bing, it also uses Yandex and a few other smaller players.

------
kube-system
Gotta love it when Wall Street comments on the strategy of companies they only
partially understand.

In order to stop paying a third-party for search results, Apple should buy a
company that mostly pays third parties for search results?

> Apple could likely buy it for under $1 billion

> a deal would be fairly easy to digest given DuckDuckGo’s small size, with
> fewer than 100 employees.

Exactly what kind of tech does this author think DDG has that Apple couldn't
build better than DDG with 1,000 employees making a $500,000 salary for 2
years?

I love DDG, but I don't think this person really knows what it is.

~~~
TAForObvReasons
Cynical part of me expects to hear about DDG raising another round in the near
future. This is the type of article I'd want out there if I were looking to
raise money, giving a seemingly plausible exit strategy with a valuation

------
x32n23nr
The article has a few weak assumptions:

> _Sacconaghi estimates that Alphabet (ticker: GOOGL) pays Apple (AAPL)
> between $7 billion and $8 billion a year for Google to be the default search
> engine for iOS ..._

The real figure is probably $12 billion -
_[https://fortune.com/2018/09/29/google-apple-safari-search-
en...](https://fortune.com/2018/09/29/google-apple-safari-search-engine/*)

> _Google pays that large sum to Apple in part out of concern about what
> Microsoft (MSFT) might be willing to pay Apple to supplant Google with Bing*

Unlikely. Apple does not have search, and they simply need the best search
available for their devices to stay true to being "premium".

> _Sacconaghi thinks Apple should consider acquiring the No. 4 search engine
> (after Google, Bing, and Yahoo)—privately held DuckDuckGo. He thinks Apple
> could likely buy it for under $1 billion, “_

This is completely off. DDG is highly unlikely to be worth that much. As
discussed in this other thread -
[https://news.ycombinator.com/item?id=23458202](https://news.ycombinator.com/item?id=23458202),
DDG is dependent on Bing both for search and ads.

> _And he also writes that “If Apple attempts to acquire DuckDuckGo but is
> blocked by regulators, it would arguably put Apple in a worse position than
> ever, given that Google and Microsoft would then know Apple has no
> alternatives.”_

This does not make much sense to me. It's not the kind of thing I see
regulators going after. Happy to be schooled though.

~~~
greenknight
> Unlikely. Apple does not have search, and they simply need the best search
> available for their devices to stay true to being "premium".

That being said, how did Apple Maps turn out vs Google Maps?

~~~
awinder
Apple Maps really has improved, and they just rolled out a huge map tile
quality improvement to get denser displays (the “closer to google” argument).

With recent quality improvements I take Apple Maps over google maps grand
majority of time (well in pre-lockdown life). It took a while but I think its
finally working out genuinely well now.

------
stirlo
Headline: Apple should buy X!!!

Analysis: "Apple can make such acquisitions for less than $1 billion. This
will be less than a week of Apple’s cash flow."

Logic: None! Apple makes $1 billion a week by avoiding running a bunch of
minnow services with stronger competitors. Apple should buy X is a meme that
needs to die.

~~~
zaphirplane
Or buy something I have taken a short position in

~~~
jagannathtech
Apple should buy Tesla ;)

------
ajzinsbwbs
I think Apple doesn’t just want to direct users to _some_ search engine, they
want it to be the _best_ search engine. The current deal, where Google pays
billions for that usage, is a pretty good partnership. Every other search
engine probably would be worse at making money off that traffic and thus
couldn’t afford to pay as much for it, and also would give a less premium user
experience. Why would Apple rock the boat?

~~~
jfoster
They didn't take that approach with maps. Might not have been as lucrative,
but could've been cheaper than developing their own, inferior maps solution.

~~~
1cvmask
They did Apple because Google orpahned their maps app on the iPhone by giving
turn-by-turn navigation capabilities first to their Android app. Classic
strategy tax that backfired as the most used maps app on Apple is the default
app and Google has a fraction of the users on the iPhone.

~~~
cma
Given the effect on early Android adoption, it might not have backfired.

~~~
azinman2
You think a strong percentage of people switched to Android simply for maps?

~~~
ajzinsbwbs
A big factor in my switching from Android to iOS was Google Maps support
coming to CarPlay. So I wouldn’t write it off.

------
sjwright
I don’t agree because the cultures are too divergent. But Apple could quietly
invest in them to ensure someone else can’t take them over...

------
the_pwner224
If this were to happen, it would be sad if it ended up like their recent
DarkSky acquisition:

[https://news.ycombinator.com/item?id=22739839](https://news.ycombinator.com/item?id=22739839)

'Buy this expensive Apple Phone you _cannot_ own / overpriced not-
professional-grade MacBook Pro, or else you have no good private search engine
option.' (except for Qwant which is usable but not good)

~~~
_emacsomancer_
Qwant and DDG seem similar in goodness to me.

------
tcbasche
> Sacconaghi thinks Apple should consider acquiring the No. 4 search engine
> (after Google, Bing, and Yahoo)—privately held DuckDuckGo

Oh please, literally nobody outside of tech has _heard_ of DDG, let alone
would want to use it on their iPhone

~~~
jedieaston
Drive around the southeast United States. There are DDG billboards
__everywhere __.

~~~
tcbasche
I would if I were allowed to fly overseas ;)

------
badrabbit
Hell no!! This would be worse than oracle taking over SUN Microsystems. I
would litetally protest in front of an applestore and I have never protested
before.

Leave ddg out of your empires. It's one of the few reliable and trustworthy
services I use daily. I guarantee apple will just ruin it and help google
dominate in the process. Thesr analysts don't get why people use ddg!

~~~
pembrook
> Thesr analysts don't get why people use ddg!

I think people who use DDG don’t get it’s mostly just bing’s search API with
better branding and privacy features.

Which isn’t necessarily a bad thing, but it just makes DDG much more of a
Microsoft acquisition target than an Apple one.

These so called “analysts” have no idea what they are talking about. Google
pays Apple nearly $8 billion a year at this point to stay the default search
on safari iOS.

Why would Apple throw away that free money to instead pay it back to Microsoft
operating a business that can only be monetized by advertising?

I doubt search will ever be part of the Apple portfolio. Users won’t pay for
it and Apple is not interested in becoming an ad network.

~~~
detaro
An independent DDG that's seen as an independent alternative, slightly hurts
Google and provides impressions for Microsoft-managed ads is likely a lot more
valuable to Microsoft than another Microsoft-owned brand that nobody will
believe is actually independent and more privacy-friendly.

------
croissantswan
I don't know how Apple can think they will remain competitive with Siri
without building a search engine.

However, Apple are really bad at executing on cloud services of any kind. With
any amount of resources there are certain things that company just cannot get
right, and search is definitely one of them. I would love to know what it is
organizationally that makes them so terrible at web apps and cloud services.

~~~
lucasmullens
Apple doesn't have to own a search engine to use one in Siri. They could pay
Google/Bing/DuckDuckGo to provide an API. Companies don't need to merge into
one big monopoly to have synergy with each other.

~~~
yellow_postit
This is what they do already to power the web results in Siri except the
search companies pay Apple.

------
utopcell
The article suggests that Apple should buy DuckDuckGo, a much smaller player
than the top-3 (Google, Bing, Yahoo) for fear of being "uncomfortably
dependent on Bing". First, if Apple wanted a search engine, they could have
acquired Yahoo for ~4BN a few years back when it went up for sale. Second, as
has been mentioned multiple times, DDG's organic search results come from
Bing.

~~~
randomstring
Yahoo isn't a search engine and hasn't been for years. Just check the "Powered
by Bing™" at the bottom of every search result. That leaves just two search
engines, Google and Bing. Not counting non-US search engines that may have
significant market share in their respective countries.

~~~
utopcell
In the years before the acquisition by Verizon, while Marissa Mayer was still
CEO, Yahoo had rebooted its own search engine, an effort that was abandoned
shortly before the sale. At that time, Apple could have very well acquired a
formidable search engine if they wanted to.

~~~
evgen
Nothing coming out of Yahoo has been “formidable” in over two decades.

------
AnonC
It used to be that "Apple should buy Netflix" for several years, on and off.
Now this. Analysts have always misunderstood Apple, what it focuses on and
what it will not do. They come up with meaningless recommendations that Apple
will not even spare time for an elevator pitch.

Wherever Apple sees any deficiencies, it works by secrecy, non-acceptance (or
denial, like "you're holding it wrong", depending on the case) and creating
its own way out of it without any or barely any acknowledgment of deficiencies
(or wrong doing, as the case may be).

I personally believe that, more than having a search engine, Apple would be
better off with an online maps solution (including navigation) that anybody
could use, regardless of their hardware and OS. It has already opened up it's
iWork suite on the cloud for everyone with a browser. Would Apple consider
such a move with maps (though it's a very weak competitor in most countries
outside the US)? I don't think so.

Also DuckDuckGo is nowhere close to Google's results for many intents and
purposes (I know anecdotally many people find it extremely useful). Apple
buying it would be a dead investment not just for this reason, but also
because Apple doesn't really know how to manage and run certain online
services well

~~~
tonyedgecombe
_that anybody could use_

If it isn't going to help sell some other product or service then I think that
is unlikely.

 _but also because Apple doesn 't really know how to manage and run certain
online services well_

That was certainly the case ten years ago, more recently they seem to have
improved.

------
philshem
Aha! I am vindicated!

[https://news.ycombinator.com/item?id=20453797](https://news.ycombinator.com/item?id=20453797)

------
jedberg
In the last week I've heard multiple ads for DDG during podcasts about
business and startups, saw an article today on HN about how DDG is better than
Google on privacy, the same article again with a different title about mobile
choice, and now this article about an analyst who thinks Apple should buy DDG.

If I didn't know better, I would think DDG is trying to get bought...

~~~
minikites
Or they know how to read the room and press on their main competitive
advantage.

------
galfarragem
A bit off topic: try Qwant[0]. I was a user of DDG for a few years but I made
the switch some months ago and didn't look back: search results are way
better. AFAIK is a European company (if that is relevant to you). I'm not
affiliated with it in any way, just an happy user.

[0] [https://www.qwant.com](https://www.qwant.com)

------
ttul
In truth, Apple already bought a search engine when they acquired Topsy. The
engineers from Topsy now work on the search tech that powers all sorts of
things at Apple.

That being said, DDG would be interesting as an acquisition for Apple because
it would be consistent with Apple’s privacy-first approach to service design.

~~~
matt-attack
But isn’t DDG just proxying search requests to Bing?

~~~
cirno
Pretty much. They claim there's multiple sources, but the results are
strikingly similar. And on image search, identical.

~~~
stormdennis
If that's all DDG are doing it would be simple for Apple to replicate, no? Do
Bing charge for this? If not could they legally enforce such charges? What
aren't there more DDGs around?

~~~
ma2rten
Yes, Bing has an API which they charge for.

------
subsubzero
I feel like every year an analyst says Apple should buy something:

\- Apple should by netflix and get into the streaming game(considering how
much appleTV stinks this may be a good idea!)

\- Apple should buy Disney, there is the synergy of two trusted brands in the
entertainment/media space(Steve Jobs did own Pixar which Disney now owns)

\- Apple should buy twitter, they can expand their news and reach a large
connected audience.

Things I think Apple should do:

Buy a large email provider, they had a yearly $100 a year email subscription
service but that was a flop, make it free and make it iOS exclusive(as an
alternative to gmail).

Buy Spotify, given they have iTunes getting spotify would make sense, perhaps
antitrust issues with this one.

~~~
skinnymuch
Netflix makes the most sense. Definitely made the most sense in hindsight or
bullish on Netflix. Buying it for $100B or so would’ve been great. Apple
would’ve been in an insanely strong position right now with whatever combined
thing they’d come out with. For the sake of a competitive market, I’m happy it
didn’t happen. I much prefer Netflix not being owned by a bigger company.

I don’t get Spotify. Spotify would cost $40B+ to buy after the premium they’d
have to offer. Apple Music keeps growing its user base. Not sure if it would
be allowed by regulators. There’s still Rhapsody in the west for music. Beyond
that I don’t think any streaming service survived.

Again for the sake of competitiveness I wouldn’t want this to happen. I still
miss Rdio’s design. Along with other things I don’t think Spotify or Apple
Music really improved on since the Rdio, MOG, Zune music (forgot the name now)
days, early Spotify, Rhapsody/Napster days.

~~~
Nasrudith
Netflix would have made more sense certainly but I suspect they would have
"pruded" it to death given their failed attempts and interference with Apple
TV over things which may offend utterly irrelevant demographics.

Even if independent a company would have been a good investment doesn't mean
that they would leave the damn thing alone and not ruin it in practice.

------
uniqueid
If Apple acquires a search engine, that engine will instantly lose most of its
value. People do not want to use a search engine that appears to be a side-
project.

What Apple should do, along with others in the industry, is jointly create and
fund a new search engine, based on non-commercial principles.

I'll quote an old HN comment:

    
    
        > I don’t understand why Google’s competitors don’t form an 
        > independent search engine. If I were Microsoft, I’d talk to 
        > Apple and others to see if they would help fund a spun off Bing.
        > 
        > The internet badly needs a big alternative search engine that
        > isn’t beholden to advertisers or dependent on a single 
        > corporate owner.
        > 
        > The benefit of such a search engine (whose main incentive is to
        > just be a good search engine) is obvious for the public, but
        > would also give companies who rely on their own OS, leverage 
        > against Google.

------
ummonk
Couldn't Apple just consume the Bing API directly instead? What would
acquiring DuckDuckGo actually get them?

~~~
gundmc
The only reason would be the goodwill/value of the brand, but I can't imagine
a company with the design and marketing chops of Apple running a service named
"Duck Duck Go".

~~~
_emacsomancer_
They would presumably rebrand it "Search".

------
mdasen
The issue with suggesting buying Duck Duck Go is that they’re reliant on
Microsoft/Bing for results. That would mean Apple coming to a deal with
Microsoft for search access where Apple runA the ads business.

If you think you can make $20B on ads and Microsoft charges you $15B for
search access on that scale, why not just let Google pay you $7B and make more
money?

It’s possible that Microsoft would charge less or that Apple could make more,
but buying DDG doesn’t get them unlimited access to Bing’s results for one low
price. I’m not implying that DDG doesn’t have any technology, but they are
reliant on Microsoft for the hardest parts and there’s no guarantee that
Microsoft would grant Apple as favorable terms when it’s not just a niche
project, but a major competitor’s new foray.

------
pier25
Even if Apple did buy DDG, it would probably become another mediocre hobby
product much like Siri.

~~~
subsubzero
It could be, but apple maps and its 1B dollar update may prove otherwise, I
feel like this was one update that really was worth it for Apple, the new maps
update is excellent and I no longer use google maps. Siri on the other hand...

~~~
pier25
Are you in the US?

I live in Mexico and even hardcore Apple fans don't use it here. It's either
Waze or Google Maps.

------
freediver
I am actually doing an experiment of using DuckDuckGo as my exclusive search
engine across all my devices for the last two weeks. The experience has been
suboptimal and much of it is on the UX side followed by the lack of search
engine features.

As a part of this experiment, I also used Bing for two weeks before this and
after a few days I could not notice that much of a difference to Google (one
thing that annoyed me was Youtube videos playing inline on Bing).

But DDG is simply painful to use as much as I want to like it. I can not
imagine it meeting Apple's product standards or having an Apple logo on what
is the current DDG product. I also can not think of any IP that DDG has that
would be interesting for Apple to own.

------
1f60c
Apple has already been crawling the web in some capacity for its Siri Website
Suggestion feature. There are obviously some hurdles to take, so there's
nothing that says they _couldn 't_ create their own search engine.

------
arvindamirtaa
Given that DDG uses the Bing API, would it really be insurance enough?

What it would do is give Microsoft all the leverage they need to negotiate
(Give us a cheaper rate or use our API and pay us a similar rate?).

------
sah2ed
The whole article is bereft of any reasonable logic as to why it makes sense
for Apple to buy DDG.

The article does mention an important detail that the so-called analyst fails
to properly account for: from Google’s perspective, its opportunity cost—the
amount of revenue it stands to lose if the deal were to be renegotiated
adversely—is at least $25B. Google therefore has every incentive to maintain
the status quo, or at least be allowed to offer to pay more than $8B to remain
the default option on iOS.

------
makecheck
Frankly, much of Apple’s search technology over the years has been terrible so
(assuming it’s a competency issue) they should at least consider buying
something better. The App Store certainly can’t find things well...I suspect
that is “by design” though. Long ago I had to replace Spotlight with Alfred to
get good performance on the desktop.

Apple isn’t an ad company, I can’t imagine they’d make a significant amount of
money releasing a general search engine just to have one.

------
Abishek_Muthian
Well, Analysts are doing their job; they did also say Apple should get Twitter
as well.

As with twitter, I don't see much merit with this argument; Which goes like
"If Apple decides to give away it's revenue stream from X, decides to go with
Y which provides inferior service, if Y decides to shut its shop, So Apple
should buy Z which doesn't generate as much revenue as X or Y"!

------
pwdisswordfish2
An ad-tech company now owns a majority interest in Startpage. Same old story.
We will take money from the ad industry to protect users from the ad industry.
Brilliant!

Maybe creating privacy-oriented search engines is actually a profitable
venture as it seems inevitable someone on the opoposing side will eventually
buy you out.

These online ad investors are so aggressive I expect Pi-Hole will one day be a
target.

~~~
_emacsomancer_
Yes, but unlike Startpage and Duck Duck Go, Pi-Hole is actually free and open
software, so it could just be forked.

~~~
pwdisswordfish2
True, and that is why I mention it as an example. I believe these online ad
industry people will try anything, even something that appears futile to you
and I. Last I checked, Pi-Hole does own a trademark application. Presumably
whomever acquired it could use this against a fork that tried to use the name.

~~~
_emacsomancer_
Having to change the name doesn't seem like an insurmountable obstacle for a
fork. (Pi Hole-Origin, Next-Hole, Ice-Weasel-Hole)

~~~
pwdisswordfish2
Does it seem like those names would not support a trademark suit? Would you
have to use the word "Hole" in order to attract users?

~~~
_emacsomancer_
My parenthetical suggestions were a joke.

But having to switch names, even to something completely different, would be
manageable, I'm sure.

------
m-p-3
Then they'd make it integrated exclusively in Apple products, like Dark Sky.

I prefer one more search engine available to everyone, not one less.

------
foobar_
It already has a trillion dollars, it doesn't have to worry about trivial
bullshit like cost-cutting. Wall street types don't really understand product
building ... the math is more like, if you increase water in cola, you can
increase profits by 20%.

------
carapace
Maybe this is a stupid question but is DDG for sale?

~~~
yodon
Every company is for sale at every moment, it's just a question of at what
price.

~~~
carapace
Technically correct, materially useless.

My impression is that the idea of Apple buying DDG is fictive, am I
hallucinating or does that seem to hold water?

------
KKKKkkkk1
Reviewing the DDG wiki page, it looks like it has VC funding since 2011. How
is it able to stay afloat for so long without going public?

~~~
philshem
from their blog:

> DuckDuckGo has been a profitable company since 2014 without storing or
> sharing any personal information on people using our search engine.

and

> As mentioned, DuckDuckGo is profitable based mostly on keyword-based search
> ads, though we have always been on the search for other ways to anonymously
> make money so that we can reduce the dependence on advertising.

[https://spreadprivacy.com/duckduckgo-revenue-
model/](https://spreadprivacy.com/duckduckgo-revenue-model/)

------
_emacsomancer_
Would be the fastest way to drive the current user base away, I imagine. Of
course, Apple probably wouldn't care about that.

------
waltherp
Why? Just open yourself up to anti-trust issues with very little upside in
earnings.

~~~
adamlett
The article literally explains the _why_ of it.

~~~
stirlo
It's a stupid why. Currently they get $8 billion for nothing. Purchase DDG
(and set default) and they lose $8 billion, users complain about worse search
results (just like maps) and Google just puts a banner on their homepage
saying here's how to change search engine and gets the search traffic for
free.

Just because apple makes plenty of money doesn't mean they should buy every
random startup.

------
ponker
The qualifications for being an "analyst" are about one-millionth of those
required to decide whether Apple should buy a search engine. This commentary
is like me telling Lebron James what strategies to use in the upcoming
basketball season.

~~~
smabie
Are you saying that corporate development is harder than being an equity
analyst? Not that it means all that much, but an equity analyst is considered
to be a more prestigious (and harder to land) position than a corporate
development job.

------
xaerise
If Apple buys DDG, I think it will die.

------
jjtheblunt
one analyst says: not analysts say

------
merricksb
[https://web.archive.org/web/20200609030352/https://baseread....](https://web.archive.org/web/20200609030352/https://baseread.com/analysts-
say-apple-should-buy-duckduckgo-search-engine/)

------
bonestormii_
Government should investigate Apple for anti-trust violations, future analyst
says.

