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Apple Develops Its Own Search Tools as Google Defends Against Antitrust Probe

Apple (NASDAQ: AAPL) has quietly introduced new search functionality with the latest iPhone iOS 14 update, according to the Financial Times.

With Alphabet's (NASDAQ: GOOG)(NASDAQ: GOOGL) Google division fending off a Justice Department antitrust probe over its search dominance, the new capability could give Apple an opportunity to compete across more services.

Woman pointing to her iPhone

Image source: Apple.

The Financial Times reports Apple made a little-noticed change to the iPhone's operating system by showing users searching from the home screen its own search results with links to sites.

Google pays Apple between $8 billion and $12 billion a year for the exclusivity of being the iPhone's default search engine, but the partnership might be questioned by Justice Department investigators.

Antitrust lawyer Sharis Pozen told the Times that Apple needs to "walk a fine line" in its responses for receiving such large sums that helped cement Google's dominance. The Justice Department could demand others receive equal access to iPhone search.

In that regard, it sounds similar to the antitrust cases that were brought against Microsoft (NASDAQ: MSFT) almost 20 years ago for bundling its Windows browser with its operating system.

Although Apple has the financial wherewithal to attempt to make inroads into Google's search dominance, others have tried and largely failed to make a dent. Microsoft's Bing has been around more than a decade, for example, but still has less than a 7% share of the market.

Yet not everyone is convinced Apple is actually building a full-throated competitive product. The Times quoted Columbia Business School associate professor of business Dan Wang as saying that because Google has developed massive scale over the years, it would be "extremely difficult" for Apple to effectively compete.

Still, developing its own search tool gives the tech giant a fallback position in the event the Justice Department untethers its relationship with Google.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Apple, and Microsoft and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. The Motley Fool has a disclosure policy.

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