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Why Bing on the iPhone Could Be Merely Symbolic

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Apple purportedly replacing Google Search with Microsoft's Bing.

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And the wedge continues to divide.

The rivalry between Apple (AAPL) and Google (GOOG) had already reached the corporate equivalent of a slap-fight, having long ago surpassed "messy breakup" and "silent treatment." But now it looks as if Apple is about to swing with a closed fist.

According to a story in BusinessWeek, Apple is in talks with lifelong nemesis Microsoft (MSFT) to replace Google Search with Bing as the default search engine on iPhones and iPod Touches. No official word has been released, but two inside sources have reportedly confirmed the matter and the App Store's approval of an official Bing app last month hints at a shift. (See It's Officially Microsoft and Apple Vs. Google.)

The timing is perfect for Microsoft's Li'l Search Engine That Could. Although a far cry from Google's percentage of all searches, Bing's market share continues to climb, mostly at the expense of Yahoo (YHOO). In fact, according to projections, if Bing rises and Yahoo sinks at the rate they have been, Microsoft will become the de facto second banana in worldwide searches by November 2010.

And when it comes to image search, there are some -- like David Pogue at the New York Times -- who prefer what Microsoft has to offer.

As for the hit that Google could incur, the drop in clicks would be noticeable but hardly sizable.

Apple likely sees the shift to Bing as a means to limit the ad revenue generated by the millions of Google searches made on iPhones and iPod Touches -- which are the top two mobile devices for search in the United States, according to AdMob. But it still can't hold a candle to the number of searches made on laptops and desktops. As long as Google is at the ready in the corner of your browser, it's safe to say the company will do fine for the foreseeable future.

And that's not considering the explosive growth of Android smartphones in the last year and their increasing ubiquity in 2010. Ad requests from Androids last December alone topped over one billion. Apple still may have them beat, but remember, Android isn't locked down to one carrier or company. Verizon (VZ), AT&T (T), T-Mobile (DT), Motorola (MOT), Sony Ericsson (SNE) -- they're all going to help Google's numbers this year.

However, if the deal does go through, are other Google properties in jeopardy on the iPhone?

Right now, Google Maps is heavily integrated with the iPhone platform, but Microsoft -- having recently launched a Street View-equivalent to Bing Maps along with other improvements -- is all set to usher in a feature-rich locator of its own. Plus, there were rumors last October of Apple acquiring a map service as a replacement for Google's baby, so it's not out of the realm of possibility. (See The Apple-Google Grudge Match Intensifies.)

And what about YouTube? Apple and Microsoft have very few alternatives to one of Google's flagship, fan-favorite apps. If Apple plans on making a complete break from Google, there would be millions of users who'd hate to see YouTube vanish from their menu screens.

But as for official apps enabling Google Voice, Google Latitude, Google Wave, et al? Apple wasn't exactly keen on integrating them in the first place -- much to the reluctant acceptance of iPhone users. But completely crushing any hope of ever seeing them on the device, well, that's a bitter pill of a different flavor.

Ultimately, Apple's tentative partnership with Microsoft and the reclassification of a default search engine carries more weight symbolically than in execution. Like a WrestleMania double-cross, for Apple to shake hands with decades-long enemy and strike a blow against a former best friend, it may make for a great story, but the giants will remain giants. This is hardly a game-changing action for Apple, Microsoft, and Google -- especially the latter. Google will continue to be a search leader for a long time.

After all, switching the factory-default search engine on your iPhone is a simple swipe and click away -- thus negating any subversive move made by Apple and Microsoft.
No positions in stocks mentioned.
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