Alphabet pays Apple $18 billion to $20 billion per year for Google to be Safari’s default search engine, research and brokerage firm Bernstein estimates.
Paul Kunert for The Register:
Google pays Apple between $18 billion to $20 billion a year to remain the dominant search engine in the iPhone, according to a financial analyst that thinks this deal, and others like it, are now at risk.
“We believe there is a possibility that federal courts rule against Google and force it to terminate its search deal with Apple,” said Bernstein in the report sent to The Register. “We estimate that the ISA is worth $18B-20B in annual payments from Google to Apple, accounting for 14-16 percent of Apple’s annual operating profits.”
Apple gives limited information on the sub-segments in its Services division, yet Google reports the money it sends to Apple under its traffic acquisition costs (TAC) to distribution partners. Bernstein says Google pays out 22 percent of total ad revenue on TAC and estimates Apple likely receives around 40 percent of this.
Patricia Battle for TheStreet:
According to Bernstein’s report, even if Apple does end up losing its billion-dollar monthly income from Google as a result of possibly losing the case, it won’t have a huge economic impact on Apple.
“Importantly, Google is on trial, not Apple, and Apple could (in theory) partner with another search engine to be the default (and/or retain the agreement with Google outside the US),” the report states.
Bernstein also notes that Apple might also end up offering a choice screen for consumers which could open the door for Apple to launch its own search engine as one of the options, something that has been rumored to be an interest of Apple for years.
MacDailyNews Take: Apple, which is said to be building its own demand-side advertising platform, could make far more by launching its own search engine, as long as it’s comparable to Google’s. Yes, it’ll be difficult to give up $20 billion annually in easy, no-work-required money, but it’ll be worth it in the long run.
As to why Alphabet pays Apple so much to get Google in front of Apple device users:
It’s all about demographics. Apple’s customers are the most coveted because, beyond taste, they have money and the proven will to spend it.
Why does Google pay Apple billions of dollars annually to be Safari’s default search engine? Because Apple has the best customers in the world and Google’s Android doesn’t. Google needs access to discerning people with means because they simply don’t have it with the great unwashed who settle for IP- and privacy-trampling iPhone knockoffs. – MacDailyNews, February 12, 2019
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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And yet it’s pathetically easy to switch to a different one
That’s not the point. You’re using the same argument Microsoft used to bake its crapware programs into the OS.
MS made it difficult to switch browsers, and they made it more difficult to actually delete their browser.
So like Apple requiring ALL iOS browsers to use Apple’s webkit over their own?
If you use the default Apple settings or any app from Gaggle or Fuckerberg, they know everything you do. Apple sold them the access to your device.
it is impossible to switch web browser in iOS. iOS is more restrictive than Windows ever was: alternative web browsers are “skins” forced to use WebKit. iOS is the opposite of a personal computer. Whenever connected to the internet, iOS devices act as a marketing engine. Apple is the middle man broker selling what it claims is “anonymized” data from your gadgets. If you are dumb enough to believe Google can’t correlate your device GPS location with your search history and every gmail you write, to our personal data and identity, then you are willfully blind.
Apple is all about the profit, not the user experience today. Web Kit is far from being the leader in privacy protection. First time setup on Safari doesn’t walk the user through wise selection of appropriate security/privacy settings. Users can’t choose privacy without “breaking” app function. Apple collects billions from known data thieves and chooses not to develop any truly private search engine or apps. How much more proof do you need to understand that Apple cares more about money than user privacy????????????
It’s a shocking amount of easy money just for a default setting.
“I will spend my last dying breath if I need to, and I will spend every penny of Apple’s $40 billion in the bank, to right this wrong. I’m going to destroy Android, because it’s a stolen product. I’m willing to go thermonuclear war on this,”
Steve Jobs
Android won…
If Google is willing to pay that much, it just shows you how much of your info they’re taking.
Google’s payment for data is out of necessity. With 2 billion Apple devices worldwide and the average person conducting over 1,000 yearly searches, the value of data is unmistakable. If Apple were to restrict data access, Google would face a significant challenge: no access to Apple customer search data.
My point: This holds true even if Apple’s products were subpar; without this access, Google’s view of society would be severely limited, spelling disaster for statistical analysis.
Google’s hunger for data is entirely justified. While they might view Apple customers as more valuable, it’s just one piece of their statistical analysis. To remain relevant, they need a comprehensive analysis of global data.
Payment ensures nothing. Users that do not switch off of Google as their search engine on iOS are either comfortable with Google or just lazy/ignorant to switch to something else. In neither case are the users feeling deprived by the results they get from having Google as their search engine.
Besides, Apple intentionally restricting data access exposes them to other possible legal actions. Their legal team seems already overwhelmed with what they have to deal with already.
IMO, if Apple’s products were subpar, there would be fewer iOS/Mac users resulting in a smaller statistical target and thus less relevant to the ‘whole’ of the data that Google collects, spelling not disaster as you state, but actually results in less diluted data influenced by anything Apple places to block remaining user data ‘leaking’ from their products.
At the global level I don’t think Google will have any less difficulty than Apple using aggregated data from iOS/Mac devices.
In order for Apple to actually influence Google’s worldwide data, they simply have to have the best products (HW and SW), at price points that ensure a good portion of the worldwide users acquire them, and an actually competitive search engine.