US-based automaker GM and Alphabet’s Google have entered an extensive partnership that will commence in 2021, according to the Wall Street Journal.
While some existing GM vehicles already feature infotainment systems that run on Google’s Android platform, this partnership will see GM add core Google services to its vehicles, including Google Assistant, Google Maps, and the Google Play store. GM plans to implement the features starting in 2021, though it will notably exempt vehicles sold in China, where Alphabet has a strained relationship with the government.
The deal allows both GM and Google to meet growing consumer demand for connectivity in vehicles, but the companies have disparate motives for striking the partnership.
- GM is looking to appeal to consumers with a seamless in-car experience by integrating services that many are accustomed to. GM said the partnership will help address growing consumer preference for an “embedded technology experience in the vehicle” and “seamless integration between the tech in their hands and the tech in their vehicles.” Google’s Android operating system (OS) holds nearly half (47%) of the US mobile OS market, according to a Bloomberg report published in 2019.
- Google gets to keep its users and the valuable data they generate within its ecosystem by partnering with the largest automaker, by sales, in the US. Google has been making a big push to integrate its services within cars as it enables it to expand the number of touchpoints it has with its users, who are spending more time traveling. In the US, drivers spend an average of 8 hours in the car per week. This, in turn, helps Alphabet continue to drive growth in its core business — advertising. Alphabet’s advertising segment constituted an estimated 70% of revenues in 2018.
The bigger picture: This is only the beginning of automakers entering extensive partnerships with big tech to integrate their popular services and features into vehicles.
While automakers have traditionally operated in a protectionist manner when it comes to vehicle data and the in-car experience, they are starting to change their tune after getting push back from consumers. Simply put, automakers are realizing they can’t provide the same type of digital experience as tech giants. As such, big tech firms will have more opportunities to bring their services to new digital platforms and expand the number of touchpoints they have with their users. This will ultimately ramp up competition for consumers’ time in vehicles as internet-connected cars become the industry norm.
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