Why does Google pay Apple tens of billions of dollars annually to be Safari’s default search engine?

Google pays Apple tens of billions of dollars annually to be Safari’s default search engine because iPhone (and Mac and iPad) users are demographically desirable (to any company that like to make profits) versus non-iPhone users.

Apple's Safari icon
Apple’s Safari icon

Eva Dou And Trisha Thadani for The Washington Post:

Lucrative, closed-door dealings between two of the world’s most powerful tech companies are under scrutiny at the Google antitrust trial in Washington, as senior Apple executives prepare to take the stand.

The pair of tech giants have been tight-lipped about the estimated $19 billion that Google pays Apple per year to ensure its search engine remains the default on iPhones and other Apple devices — a deal that spans 18 years. Both companies have sought to keep details of the transactions out of the public eye, with filings in the case heavily redacted.

At issue is whether this agreement is monopolistic, and shuts out Google’s competition from having automatic access to Apple’s billions of users… Rebecca Haw Allensworth, a Vanderbilt antitrust law professor, said Apple’s testimony will hopefully clarify the intent behind Google’s payments: Was it an above-board business deal, or a scheme to shut out competition?

“Google is paying billions of dollars to Apple to have that privileged status,” she said. “Any competitor to Google would also want access.”

Neil Shah, vice president of research at Counterpoint Research, points out that while Apple has 52 percent of the U.S. smartphone market overall, it commands a whopping 80 percent of the premium smartphone market. Google is paying to get its ads in front of these high-rollers using iPhones, and it’s splitting the profits with Apple.

“These ‘premium eyeballs’ which Apple has access to are very lucrative but hard to target for advertising companies such as Google due to Apple’s walled garden,” he said.

MacDailyNews Take: Earlier this month, Asymco‘s Horace Dediu did the math and arrived at the conclusion that Apple iPhone owners are 7.4 times more valuable than those who settle for wannabe iPhones loaded with Google’s Android.

Real iPhones vs. Poor Man’s iPhones. Same as it ever was.MacDailyNews, April 22, 2022

The bottom line: Those who settle for Android devices are not equal to iOS users. The fact is that iOS users are worth significantly more than Android settlers to developers, advertisers, third-party accessory makers (speakers, cases, chargers, cables, etc.), vehicle makers, musicians, TV show producers, movie producers, book authors, carriers, retailers, podcasters… The list goes on and on.

The quality of the customer matters. A lot.

Facile “analyses” that look only at market (unit) share, equating one Android settler to one iOS user, make a fatal error by incorrectly equating users of each platform one-to-one.

When it comes to mobile operating systems, all users are simply not equal.SteveJack, MacDailyNews, November 15, 2014

Android is pushed to users who are, in general:

a) confused about why they should be choosing an iPhone over an inferior knockoff and therefore might be less prone to understand/explore their devices’ capabilities or trust their devices with credit card info for shopping; and/or
b) enticed with “Buy One Get One Free,” “Buy One, Get Two or More Free,” or similar ($100 Gift Cards with Purchase) offers.

Neither type of customer is the cream of the crop when it comes to successful engagement or coveted demographics; closer to the bottom of the barrel than the top, in fact. Android can be widespread and still demographically inferior precisely because of the way in which and to whom Android devices are marketed. Unending BOGO promos attract a seemingly unending stream of cheapskate freetards just as inane, pointless TV commercials about robots or blasting holes in concrete walls attract meatheads and dullards, not exactly the best demographics unless you’re peddling muscle building powders or grease monkey overalls.

Google made a crucial mistake: They gave away Android to “partners” who pushed and continue to push the product into the hands of the exact opposite type of user that Google needs for Android to truly thrive. Hence, Android is a backwater of second-rate, or worse, app versions that are only downloaded when free or ad-supported – but the Android user is notoriously cheap, so the ads don’t sell for much because they don’t work very well. You’d have guessed that Google would have understood this, but you’d have guessed wrong.

Google built a platform that depends heavily on advertising support, but sold it to the very type of customer who’s the least likely to patronize ads.

iOS users are the ones who buy apps, so developers focus on iOS users. iOS users buy products, so accessory makers focus on iOS users. iOS users have money and the proven will to spend it, so vehicle makers focus on iOS users. Etcetera. Android can have the Hee Haw demographic. Apple doesn’t want it or need it; it’s far more trouble than it’s worth.MacDailyNews, November 26, 2012

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    1. This is an old, old issue. Nothing wrong to resurrect it and put it in the microwave again. I have not touched a Google search engine on any device me or my family or my friends for over a decade and a half. Their America-hating search engine algorithms and Democrat part ass kissing was enough for me already then.

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