Why Apple and Google are at the highest risk of disruption in 10 years

  • This year, Apple and Google will face their first real tests in a long time according to this analysis.
  • Apple could finally open up its walled garden, which could topple the App Store giant.
  • The rise of ChatGPT threatens Google’s dominance over search and its advertising business.
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In recent years, many of us have often had the feeling that the technology industry is moving slowly. Each innovation—folding screens, 5G, even blockchain and cryptocurrency—felt like natural steps on the technological path rather than a big exponential leap into the future.

Google has been protecting its advertising business for more than a decade; Apple built as much as possible around its business of the iPhone. He grew rich through App Store fees and Apple Music subscriptions.

However, both businesses are about to face what may be their strongest threats to date. And while it’s too early to praise the two companies, we’ll see Apple and Google quickly go on the defensive. This, in a way that neither of them had done.

In the case of Apple, global regulatory pressure seems to have finally broken through its infamous walled garden: new rules threaten to undermine its hegemony on the App Store. The timing is especially interesting, as Apple is said to be gearing up to launch a new set of mixed reality headsets.

In fact, they are expected to extend the control of the App Store over consumers and developers alike for a new generation of computing.

On the other hand, at Google, the rise of AI-powered chatbots like ChatGPT poses a clear danger to its digital advertising engine. If you can get a clear and concise answer to a written question in the same way you would ask a smart friendwho needs a search engine?

Microsoft seems to agree, as it is said to be working on integrating ChatGPT into its own Bing search engine.

Let’s see how this is finally the year that Apple and Google will face their most significant competition to date.

Walls come down for Apple

After years of political scrutiny, international investigations, and a court battle with Epic Games, the regulators finally got what they wanted.

Apparently, Apple is preparing an update to the iOS operating system for this year. For the first time, it would allow third parties to offer their own app stores for iPhone and iPad.

Apple has long argued that the App Store’s model of vetting all apps before launch is the key to its appeal.

The reason is that it guarantees that these apps meet certain security and content standards before they appear in the App Store.

Apple says its 30% cut on most App Store transactions is a fair price to protect users from scams, malware and shoddy apps. And, the company will bring the App Store to its next augmented reality glasses; according to Bloomberg, they could finally be presented in the first half of this year.

Critics—including regulators, legislators, game developers, competitors, startups, Elon Musk, Mark Zuckerberg, and just about everyone outside of Apple—claimed that the App Store’s approach is fundamentally anti-competitive, as iPhone users have literally no alternative to installing software.

However, we’re about to get our first real-world test of whether Apple was right that a crack in its walled garden would bring the whole thing crashing down. If the App Store opens and the iPhone doesn’t turn into a toxic hellhole, perhaps Apple will reconsider its approach. Or it may open the floodgates and the iOS ecosystem becomes a lawless wasteland. In any case, at least we will know.

Google gets real competition

The threat to Google is a bit more direct. ChatGPT, the popular chatbot created by OpenAI, has already won applause from prominent Silicon Valley figures. Investor Chamath Palihapitiya has hailed it as the first major Internet search innovation in a long time.

It’s clear that Google is taking the threat seriously: The company’s management declared a “code red” in the face of the ChatGPT uproar. Investors and analysts praise Microsoft for its strategy of integrating technology into the engine of bing search and the Office productivity suite. Microsoft is also said to be planning a $10 billion investment in OpenAI itself.

ChatGPT is very versatile. You can answer simple queries like the population of Paris or the definition of “parliamentarian”. But you can also ask him to write a William Shakespeare-style sonnet on the Burger King menu or a snippet ready to add to your current app.

While it’s not always perfect, it’s absolutely better 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.

This is a weak point of Google.

In recent years, critics have complained that Google gives too much priority to ads and sponsored results, burying the real information you need under a bunch of useless (but lucrative) links. Why deal with all that when ChatGPT can give you a quick, helpful and hopefully correct answer to the specific question you asked?

This puts Google in a bind. If ChatGPT and its likes take off, more people will use it to search the Internet, which means users will see less of Google’s all-important search ads. On the other hand, if Google tries to imitate the concept, for which it undoubtedly has the intelligence and talent to do so, it would upset its own business model and reduce the reach of those same ones. search ads.

It’s unclear when, or even if, the new wave of AI will start making significant inroads into Google’s search domain. As analyst Ben Thompson pointed out in an issue of his Stratechery newsletter this week, it’s often crazy to underestimate how deeply entrenched Google is in the broader tech ecosystem, from browsers to smartphones. And ChatGPT is incredibly expensive and limited in its capabilities, at least for the moment.

Either way, it’s probably good for the industry as a whole that ChatGPT puts the tech titan on the rare situation to play defense. Competition in the market helps everyone. And at least it won’t be boring.

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Why Apple and Google are at the highest risk of disruption in 10 years