Apple Could Be Big Beneficiary Of Microsoft-Google AI Battle — Here's How

Microsoft Corp. MSFT and Alphabet Inc. GOOGL GOOG have revved up the AI battle with their recent strategic moves. 

What Happened: Apple Inc. AAPL, which is going slow on its own AI ambitions with its mixed reality headset, could be a potential beneficiary of the intensifying artificial intelligence battle between Microsoft and Google.

See Also: Everything You Need To Know About Apple Stock

Generous Google Bounty: Apple is already in receipt of multi-billion dollars from Alphabet for the former keeping Google as the default search engine in iOS devices. An August 2021 note from Bernstein analyst Toni Sacconaghi Jr. said Apple was on track to receive $15 billion from Alphabet in 2021 for the purpose, representing a 50% increase from $10 billion paid in 2020.

Separately, a lawsuit filed in late December 2021 alleged that Apple and Google have an agreement in place that precludes the former from competing with the latter in the search business.

The terms of the non-compete agreement call for Google to share its search profits with Apple in return for getting preferential treatment in all Apple devices, the complaint alleged.

Will Microsoft Toe In Line? Alphabet’s Google is the dominant player in the search business with 93% of the market in January, according to data from Statcounter. Bing’s share was merely about 3%.

“With new and attractive features for its users on the Bing search engine, Microsoft's MSFT’s AI-driven strategy is set to challenge the web search market by grabbing market share as users see increased benefits and a new user experience,” said Wedbush analyst Daniel Ives.

In the event of Microsoft upping the ante and making a splash in the search market, it is likely that the software giant would want Bing’s presence on Apple hardware. This in turn could mean Apple monetizing this opportunity competitively.

Google's $15 billion deal with Apple will be re-negotiated, stirring a bidding war with Microsoft, said Scale AI founder Alexandr Wang in a tweet.

"It will become at least $25B, if not more. If MSFT is willing to spend $10B on OpenAI, they'll spend even more here," he added.

Incidentally, rumors of Apple developing its own search engine have been in the works since 2015 although no significant progress has been made on that front. The rumors gained ground after Cupertino bought news/recommendation startup Laserlike in 2018. An Information report in November 2022 said all three Laserlike founders, who started the venture after moving out of Google, have since then returned to Google.

Read Next: Microsoft To Arm Search Engine, Browser With Tech 'More Powerful' Than ChatGPT In Heated AI Battle With Google