Apple (NSDQ: AAPL) and Google’s rivalry may be hitting a new high as reports roll in that the iPhone-maker may be talking to Microsoft (NSDQ: MSFT) about replacing Google (NSDQ: GOOG) with Bing as the default search engine on the popular smartphone.
BusinessWeek reports that the talks have been under way for weeks, according to two unnamed sources. The tensions may signal that Apple and Google’s once strong relationship may be deteriorating. Not long ago, Google’s CEO Eric Schmidt held a seat on Apple’s board, but since then, Google has become more competitive in the mobile-phone space by coming out with the Nexus One, its own phone. Likewise, Apple has rejected multiple Google applications for the iPhone, including Google Voice and Latitude. For Microsoft, the switch would be huge since it’s commonly considered behind in the mobile-search space.
Today, most of the mobile-search traffic in the U.S. is determined by the carriers, which have forged direct relationships with search engine providers. AT&T (NYSE: T) and T-Mobile USA have partnered exclusively with Yahoo (NSDQ: YHOO), Sprint (NYSE: S) uses Google, and Verizon Wireless has recently started to use Microsoft’s Bing. Google frequently commented on the amount of traffic coming from the iPhone alone. Last month, Microsoft launched its Bing iPhone, app, which received a lot of praise for being good-looking and intuitive.
One of the unnamed sources told BusinessWeek: “Apple and Google know the other is their primary enemy. Microsoft is now a pawn in that battle.” Beyond rejecting Google’s applications, Apple is also working on ways to manage ad placement on its mobile devices, which is a direct threat to Google. Both companies have recently made multi-million dollar purchases in the mobile advertising space. Google has agreed to buy mobile ad network AdMob, and Apple has agreed to purchase Quattro Wireless. Microsoft and Apple are not without their conflicts, however. While Microsoft may not be considered a threat yet, it too has developments underway in the areas of mobile phones and mobile search and advertising.
Both Microsoft and Apple declined to comment on the possible discussions, and the deal is still pending.