Google Pays Apple $3 Billion Per Year To Remain On the iPhone, Analyst Says (cnbc.com) 101
In a note to investors on Monday, Bernstein analyst A.M. Sacconaghi Jr. said Google is paying Apple billions of dollars per year to remain the default search engine on iPhones and iPads. "The firm believes that Google will pay Apple about $3 billion this year, up from $1 billion just three years ago, and that Google's licensing fees make up a large bulk of Apple's services business," reports CNBC. From the report: "Court documents indicate that Google paid Apple $1 billion in 2014, and we estimate that total Google payments to Apple in FY 17 may approach $3 billion," Bernstein analyst A.M. Sacconaghi Jr. said. "Given that Google payments are nearly all profit for Apple, Google alone may account for 5% of Apple's total operating profits this year, and may account for 25% of total company OP growth over the last two years."
ROI (Score:5, Insightful)
I presume G has done the ROI calculation of gaining iDevice search ad revenue, and it is estimated to have increased by more than that $3B, but I really think G would be better off letting Apple default to using Bing for a year. The Android eco-system (and the Pixel group) will love the increased customers.
Re:ROI (Score:5, Interesting)
If bing got the traffic google has they might be able to improve search results and suddenly google might have a real competitor... That is a HUGE risk, 3B/yr is probably not that bad to offset any chance of real competition.
Re: (Score:3, Insightful)
It's not a guess when the article states 50% of all Google ad revenues come from iOS.
Google fucked with Apple, using their privileged early access to the device & SKDs by cloning most aspects of it and try to undercut Apple's new market. They might have the numbers, but they fail at the margin. So they're stuck continuing paying Apple's license in order to monetize.
Re: (Score:2)
>but I really think G would be better off letting Apple default to using Bing for a year
Shots fired.
They are paying to exclude Bing (Score:2)
This is not money for access but rather to make sure Bing can't have the default spot.
Re: (Score:2)
You're joking right?
If any company deserves to be broken up, it's Microsoft.
Apple is larger than Microsoft, so why not break up Apple first, and see how it goes?
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Larger by profits but still a small player when talking about marketshare, so they're nowhere near a monopoly which AFAIK is the only thing that can be used by law to split up a company.
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So how much does Google pay Microsoft to be allowed to be the dominant search engine on Windows?
$0.00
Interesting that Apple can, in practice, decide which engine its users' use. The way of the future I'm afraid.
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I don't use iOS, so I don't know if the default search engine is readily changed, however...
Windows defaults to Bing and Edge. No one cares about the defaults and quickly changes it over to something else because it's trivial to do. Google does not pay MS probably due to some combination of:
1) MS won't do it for any price because they want Bing to suceed
2) Google already *knows* how ineffective having the default in Windows seems to be from evidence, so it's not worth much
With iOS, it's a big unknown. Go
Re: (Score:2)
3) Microsoft is not allowed to.
Remember, Microsoft was found to be a monopoly and an abusive one at that, so they are looked at
Re: Break up Apple (Score:4, Informative)
Apple is larger than Microsoft, so why not break up Apple first, and see how it goes?
Bigness is not a problem in itself. Only abuse of monopoly power. Apple is nowhere close to a monopoly in any market.
Re: (Score:2)
Because M$ is evil and the enemy of all geeks and Apple isn't?
Re: (Score:3)
Anti-trust laws.
Re: (Score:2)
Really? But Google making a phone is OK?
But Google hardly sells any phones. Probably on purpose, to avoid anti-trust investigations.
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You and the GP are fucking morons. Google is paying Apple. Why the fuck would Apple spend a cent on a replacement?
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If building a decent Google competitor could be done that fast, how come Bing is still a piece of crap? Or does Microsoft simply not spend the needed money to make Bing not suck?
Re: (Score:3)
What makes you think Bing is crap?
MS definitely spends real money on it. It has got a lot better.
And Google is not without its faults. I recently had a website W for which a *different* website X had a bad self signed cert pointing to W. Searches for W ended up pointing to X on Google. Took weeks to sort out. Bing never missed a beat.
I'd say Google is better if you do side by side searches, but not by much. And I am certainly glad there is some competition.
Re: (Score:2)
Apple can't make their own search engine for the same amount?
Current situation: $3B in royalty - $0 in cost = $3B in profit.
Your proposal: $3B in ad revenue - $3B in development, hosting and indexing = $0 profit.
Of course, in reality cloning Google would cost WAY more than $3B. Google's search related operating costs are more than $20B/yr.
Re: Seriously (Score:1)
Apple does have a search engine, not exposed as a web page though. It's called Siri Search and works in both Safari address bar as well as from Spotlight. It does suck though. Many folks from Yahoo and Bing are already on the team, but it's size nothing compared to the big boys.
The strategy seems to scare Google with switching to an alternate search engine -- so google gives more money.
Re: (Score:2)
Your proposal: $3B in ad revenue - $3B in development, hosting and indexing = $0 profit.
Well, actually, that shouldn't be the case.
Presumably there's more revenue than that, else Google probably wouldn't do it.
Re: (Score:1)
Why would Apple spend money for a service that Google is paying them to provide? Do you not have any understanding of business or economics?
Re: Seriously (Score:1)
It isn't Apple paying Google, it's Google paying Apple.
Specifically , Apple has taken a position to not monetize their customer's as product - kinds of hard to put do Google if that is your starting point
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How many times has this been tried and resulted in total failure? Search engines, social media sites, self-driving cars, even operating systems. Poaching top talent and throwing money at the problem doesn't necessarily mean you can produce a viable alternative.
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You mean make one for negative three billion dollars? That'd be a good trick.
Pay up, Google (Score:5, Funny)
Or we will switch our users to Apple Maps. And you will never see any of us again.
Re:Pay up, Google (Score:5, Funny)
Of course they won't. We'll all be dead in the middle of Australia.
Re: (Score:2)
Of course they won't. We'll all be dead in the middle of Australia.
Bloody hell, not again.
Bruce, start digging another hole.
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And you will never see any of us again.
That's because you're all lost
Why??? (Score:1)
OR (Score:5, Informative)
It has been shown time and time again that Apple users are more willing to buy stuff, therefore the ads to Apple users are worth more to Google and the people who place the adverts.
Re: (Score:3)
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Ferrari makes premium cars for premium dollar, but really it's the mass market car companies that contribute more to mankind.
It's fine, both have their role.... I just like one better than the other....
I'm not quite sure what your point is - Apple's world wide marketshare in computers, would make them 2nd or 3rd of the mass market car companies. In smartphones share there would even be a competition.
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Android might have market share, but reality is, most of the users are worthless.
It's advertising to people who understand that they have a choice that's worthless.
Re: (Score:2)
replace with duckduckgo
DuckDuckGo is one of the built-in options with iOS - I've got it set as my default search engine.
Re: (Score:2)
The four current options (in the US, anyway) for Safari's search engine are:
Google (default)
Yahoo
Bing
DuckDuckGo
I can't imagine Yahoo will be there much longer. And DuckDuckGo is relatively new - I don't believe it was there prior to iOS 8 (although I used to manually add it on my jail broken devices).
Re: dump goolagle (Score:5, Informative)
"Both yahoo and duckduckgo use bing for search. So the options are only 2 - google and bing"
Untrue:https://duck.co/help/results/sources [duck.co]
Re: (Score:2)
Partially true, reading your link:
"In fact, DuckDuckGo gets its results from over four hundred sources. These include hundreds of vertical sources delivering niche Instant Answers, DuckDuckBot (our crawler) and crowd-sourced sites (like Wikipedia, stored in our answer indexes). We also of course have more traditional links in the search results, which we source from Bing, Yahoo, and Yandex."
Re: (Score:2)
Ah! (Score:2)
Nice to get an inside look at how the invisible hand helps the market decide.
Damn it (Score:2)
My wife is on the iphone all year long too, and she doesn't get paid a cent :(
Re: Damn it (Score:2)
Has she tried CAM4?
So 20 years after (Score:2)
He said in jest.
some one should tell them... (Score:1)
Reasoning? (Score:2)
Re: (Score:1)
I very rarely use any maps app on my phone. Neither Apple nor Google Maps. My goto app is Waze. I suppose Google could pull the iOS version, but Google could also blow up its HQ with explosives.