This year, Apple and Google will both face their first real tests in a very long time.
Apple could finally open its walled garden, potentially disrupting the App Store juggernaut.
The rise of ChatGPT threatens Google’s stranglehold over search — and its ad business.
Sign up for our newsletter to get the inside scoop on what traders are talking about — delivered daily to your inbox. Loading Something is loading. Thanks for signing up! Access your favorite topics in a personalized feed while you’re on the go. download the app Email address By clicking ‘Sign up’, you agree to receive marketing emails from Insider as well as other partner offers and accept our Terms of Service and Privacy Policy
Over the last few years, it’s often felt like the tech industry was on cruise control.
Each innovation — folding screens, 5G, even the blockchain and cryptocurrency — failed to shake a sense that the future of tech is moving forward incrementally rather than exponentially. Google has spent the last decade-plus guarding its advertising business; Apple has built as many moats around its all-important iPhone business as possible, happily collecting App Store fees and Apple Music subscriptions.
Now, though, both businesses are about to face what are arguably their most existential threats to date. And while it’s far too soon to write a eulogy for either company, you will see Apple and Google swiftly move to play defense in a way neither has had to in recent memory.
For Apple, regulatory pressure worldwide seems to have finally cracked its infamous walled garden, as new rules threaten to undermine its App Store hegemony. The timing is especially interesting, as Apple is said to be preparing to launch a new set of smart glasses poised to extend the App Store’s hold over consumers and developers alike for a new generation of computing.
And at Google, the rise of AI-powered chatbots like ChatGPT represents a clear and present danger to the digital advertising engine that pays the bills. If you can get a clear, concise answer to a question written the same way you’d ask a smart friend something, who needs a search engine? Microsoft seems to agree, as it’s said to be working on rolling ChatGPT into its own Bing search engine.
Let’s look at how this is finally the year that Apple and Google will face their most meaningful competition yet.
The walls fall for Apple
After years of saber-rattling, political scrutiny, international investigations, and one very closely-watched court battle with Epic Games (of “Fortnite” fame), regulators have finally gotten what they want. Apple is reportedly preparing an update to the iOS operating system this year that would, for the first time, allow outside parties to offer their own app stores for iPhone and iPad.
Apple has long argued that the App Store model, which vets every iPhone and iPad app in-house to ensure it meets specific security and content standards before it appears on the App Store, is key to its devices’ appeal to customers.
The company justifies its 30% cut from most App Store transactions as a fair price to protect users from scams, malware, and shoddy apps. Presumably, Apple will bring the App Store to its forthcoming augmented reality goggles, which Bloomberg recently reported could finally be showcased as soon as the first half of this year.
Critics — which, over the years, has included regulators, lawmakers, game developers, competitors, startups, Elon Musk, Mark Zuckerberg, and pretty much everybody who isn’t Apple — have said that the App Store approach is fundamentally anti-competitive, on the basis that there’s literally no alternative way for iPhone users to install software.
Still, we’re about to get our first real-world test on whether Apple was right that a crack in its walled garden would cause the whole thing to tumble down. If the App Store opens up and the iPhone doesn’t become a toxic hellstew, perhaps Apple will reconsider its approach. Or, it may open the floodgates, and the iOS ecosystem will become a lawless wasteland. Either way, at least we’ll know.
Google gets some real competition
The threat to Google is a little more in-your-face. ChatGPT, the popular chatbot made by OpenAI has already won applause from prominent figures in Silicon Valley. Investor Chamath Palihapitiya hailed it as the first great innovation in internet searches in a long time.
It’s clear that Google is taking the threat seriously: The company’s leadership declared a “code red” over the rise of ChatGPT. Investors and analysts are praising Microsoft for its reported strategy of integrating the technology with the Bing search engine and Office productivity suite. Microsoft is also said to be planning a $10 billion investment in OpenAI itself.
ChatGPT is wildly versatile. It can answer simple queries like the population of Paris or the definition of “parliamentarian.” But you can also ask it to write a sonnet in the style of William Shakespeare about the Burger King menu or a snippet of code ready to be added to your app-in-progress. While it isn’t always perfect, it’s absolutely wild to use a system that will find what you’re looking for if it exists — or create something for you on the spot if it doesn’t.
It hammers right into a weak spot for Google. Over the last several years, critics complained Google gives too much priority to ads and sponsored results, burying the real information you need under a mound of useless (but lucrative) links. Why deal with all of that when ChatGPT can give you a quick, useful, hopefully correct answer to the very specific question you asked?
This puts Google in a bind. If ChatGPT and its ilk take off, more people will use it to search the internet, meaning that users will see fewer of Google’s all-important search ads. On the other hand, if Google tries to imitate the concept — which it certainly has the brainpower and talent on board to do — it would mean disrupting its own business model, reducing the reach of those same search ads.
It’s unclear when or even if the new wave of AI will start making meaningful inroads into Google’s search domination. As analyst Ben Thompson noted in an edition of his Stratechery newsletter this week, it’s usually folly to underestimate how deeply Google is embedded in the larger tech ecosystem, from browsers to smartphones. And ChatGPT is incredibly expensive to run and limited in its capabilities, at least for the time being.
No matter how you slice it, though, it’s probably a good thing for the industry overall that ChatGPT is putting the tech titan in the rare position of playing defense. Competition in the market helps everybody. And at least it won’t be boring.
Apple and Google Facing Real Competiive Pressure in 2023
- Advertisment - 
Recent Comments
on Iowa State starting RB Jirehl Brock among latest college football players charged in gambling probe
on The Rev. Al Sharpton to lead protest after Florida governor’s ban of African American studies course
on Sports World Hails ‘Superwoman’ Lindsey Vonn for Her Grand Comeback Despite Career-Changing Injury
on San Mateo County Community College District sues five companies over role in ‘pay to play’ scandal
on Saipan, placid island setting for Assange’s last battle, is briefly mobbed – and bemused by the fuss
on ‘Pokémon Scarlet’ and ‘Violet’ Fan Theories Suggest Legendary Time Travel, Alternate Dimension Plot
on Joe Manchin and Tommy Tuberville introduce bill on name, image and likeness rules for college sports
on Inside the Michael Jordan ‘Air’ movie, plus why NFL, others are buying into the sports film industry
on If you’re a frequent traveler, these wrap tops from Aday will revolutionize your on-the-go wardrobe
on How Does Jack Nicklaus Travel? Exploring the Private Jets Owned by the ‘Golden Bear’ Over the Years
on Hollywood Reporter: Tom Cruise negotiated with movie studios over AI before the actors strike began
on Ford Blue Cruise: US regulators investigate fatal crashes involving hands-free driving technology
on Dozens of boats cruise the Seine in a rehearsal for the Paris Olympics’ opening ceremony on July 26
on Devout athletes find strength in their faith. But practicing it and elite sports can pose hurdles
on Despite strong Lunar New Year holiday data, consumer spending in China isn’t roaring back just yet
on David and Victoria Beckham so ‘Charmed’ by Tom Cruise They Have His Photos on Display at Their Home
on CONCEPT ART: New Details Revealed for Disney Cruise Line Lookout Cay at Lighthouse Point Destination
on CBS Sports announces Matt Ryan will join NFL studio show. Longtime analysts Simms and Esiason depart
on Boston College vs. Army live stream, how to watch online, CBS Sports Network channel finder, odds
on Boise State vs. Air Force live stream, odds, channel, prediction, how to watch on CBS Sports Network
on Biden to tout bill’s prescription drug prices, energy provisions in pitch to Americans, aide says
on After UFC Fallout, Conor McGregor Offers a Valuable Piece of Advice to Free Agent Francis Ngannou
on 2024 Super Bowl: CBS Sports Network and CBS Sports HQ to combine for 115 hours of weeklong coverage
on ‘Best Intention’: Chris Kirk Has Absolute Trust in Jay Monahan and PGA Tour’s Widely Debated Model
on 2023 NFL All-Rookie Team: CBS Sports draft expert, former GM unveil league’s best first-year players
on “Completely Knocked Me Out”: Rob Lowe Recalls Boxing Match With Tom Cruise On 1983 Brat Pack Classic
on CONCEPT ART: New Details Revealed for Disney Cruise Line Lookout Cay at Lighthouse Point Destination
on “Completely Knocked Me Out”: Rob Lowe Recalls Boxing Match With Tom Cruise On 1983 Brat Pack Classic
on CBS Sports announces Matt Ryan will join NFL studio show. Longtime analysts Simms and Esiason depart
on Carlos Sainz’s Soccer Fanboy Emerges as Spaniard Shares Defining Moment With This Real Madrid Legend
on Biden: ‘At this point I’m not’ planning to visit East Palestine, Ohio, after toxic train derailment
on ‘Best Intention’: Chris Kirk Has Absolute Trust in Jay Monahan and PGA Tour’s Widely Debated Model
on Ahead of big sports weekend, dispute with Disney leaves millions of cable subscribers in the dark
on A heavy wave of Russian missile attacks pounds areas across Ukraine, killing at least 4 civilians
on 2024 Super Bowl: CBS Sports Network and CBS Sports HQ to combine for 115 hours of weeklong coverage
on 2023 NFL All-Rookie Team: CBS Sports draft expert, former GM unveil league’s best first-year players
on Army vs. Coastal Carolina live stream, how to watch online, CBS Sports Network channel finder, odds
on AL Rookie of the Year Julio Rodriguez Spreads Joy and Sportsmanship to the Youth of Loma de Cabrera
on After UFC Fallout, Conor McGregor Offers a Valuable Piece of Advice to Free Agent Francis Ngannou
on Dubai International Airport sees 41.6 million passengers in first half of year, more than in 2019
on Devout athletes find strength in their faith. But practicing it and elite sports can pose hurdles
on Despite strong Lunar New Year holiday data, consumer spending in China isn’t roaring back just yet
on Dave Portnoy: Taylor Swift’s security should ‘drag Kim Kardashian to jail’ if she attends Eras Tour
on CONCEPT ART: New Details Revealed for Disney Cruise Line Lookout Cay at Lighthouse Point Destination
on “Completely Knocked Me Out”: Rob Lowe Recalls Boxing Match With Tom Cruise On 1983 Brat Pack Classic
on CBS Sports, Serie A announce new TV rights deal; Paramount+ to air over 400 Italian soccer matches
on Cam Newton’s Violent Public Incident Draws Hilarious Reaction From 3x All-Star: “Where Do I Sign Up
on Boston College vs. Army live stream, how to watch online, CBS Sports Network channel finder, odds
on Angel Reese Launches Foundation Dedicated To Empowering Women Through Sports & Financial Literacy
on A weaker dollar, skyrocketing prices and ‘record’ visitor numbers: Good luck in Europe this summer