
Google is paying Apple billions per year to remain on the iPhone - pestkranker
https://www.cnbc.com/2017/08/14/google-paying-apple-3-billion-to-remain-default-search--bernstein.html
======
miket
So, in other words, $25B worth of attention is transferred from iOS users to
Google[1], which Google pays Apple $3B for this access.

[1] [https://www.recode.net/2017/7/24/16020330/google-digital-
mob...](https://www.recode.net/2017/7/24/16020330/google-digital-mobile-ad-
revenue-world-leader-facebook-growth)

~~~
wwweston
What's the exchange rate between units of attention and dollars these days?

~~~
SeanDav
to Google: about 8 to 1...

------
intopieces
>On the other hand, Sacconaghi said that Apple's iOS devices contribute about
50 percent to Google's mobile search revenue, which means Google might be too
afraid to walk away from its licensing deal with Apple.

50%? Am I reading this right, that iOS makes up 50% of Google's mobile search
revenue? IDC reports that Android made up 85% of the mobile OS market share in
Q1-17, while iOS makes up 14.6%. How could iOS be contributing half of the
mobile search revenue when Google's own OS is on most of the mobile devices in
the world?

[0][https://www.idc.com/promo/smartphone-market-
share/os](https://www.idc.com/promo/smartphone-market-share/os)

~~~
genericpseudo
This observation is the single most important thing you need to know if you
work in consumer mobile.

To first order, iPhone owners spend money. Android owners don't. This is
because your average iPhone user cares more about what phone they're using and
simply _uses_ it more.

This _is_ a first-order approximation. The small percentage of people who
actively _choose_ Android do spend and do use their phones a lot, and by
goodness are they vocal, but the more useful way of thinking about the market
is not two-segment, it's three-segment:

* Vast majority: don't care about their phone OS, won't pay for anything

* Significant minority: want iPhones, will most probably spend money

* Significant but even smaller minority: actively want Android, will buy premium Android phones (e.g. Nexus, high-end Samsung), will either spend money or, with roughly equal likelihood, jailbreak and pirate everything in sight.

From this perspective iOS remains the most compelling mobile OS to target.
Additionally, iOS users – on average - use apps more and for longer, though
again that effect is small when you control for the kind of Android devices
people go out of their way to choose.

~~~
Symbiote
> From this perspective iOS remains the most compelling mobile OS to target.

That fine if you're trying to make money, but it still annoys me when
something like a government or non-profit targets iPhone first.

~~~
genericpseudo
Absolutely, yes. Your moral argument there is pretty undeniable; I'm speaking
purely to propensity-to-spend and that's a pretty narrow lens.

In fact, I'd say "target the web" if you're going for maximum accessibility
and you're not driven by commercial factors, though that doesn't work for
every app and the usability/discoverability issues can be real. Favoring any
commercial platform as a government is a very uncomfortable place to be.

------
myusernameisok
> "Court documents indicate that Google paid Apple $1B in 2014, and we
> estimate that total Google payments to Apple in FY 17 may approach $3B,"
> 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."

It's crazy considering even if Apple switched default search engines I'm sure
a lot of users would switch back to Google.

~~~
wnissen
Several months after Apple Maps became the default, something like 2/3rds of
all users switched away from Google Maps. It's hard for me to believe, since
the Apple Maps are more attractive but still less useful, but those are the
numbers. I wouldn't count on a big return to Google Search.

~~~
saagarjha
Most people can’t tell the difference and go with the default. Even the people
who have it installed are often redirected to Apple Maps by Siri and location
links since they will always use it.

~~~
dionian
I prefer usability (UX) over content, I used to switch to other maps when I
had issues with data, but there hasn't been the need to in a very long time.
Default is great especially if the UX is better. Google is ok, but Apple Maps
UI is the best. I still use Waze from time to time though.

~~~
nowherecat
I find Apple Maps annoyingly slow in calculating routes and responding to my
input. Google Maps worked alright for me, but I switched to Waze a couple
months ago and can't go back anymore.

Waze is superior in so many ways. It knows (most) contruction sites/road
closures (there are many where I live), Waze tells me about speed traps and
accidents. Maybe not the best UI, but I definitely get the best results. And I
enjoy submitting Road closures etc myself - hoping that I am helping others
get where they want faster/without unexpected issues. It's not perfect, but it
has definitely saved me a lot of time.

~~~
Spooky23
IMO, Waze is hit or miss, but fun. If you're doing a multi-car road trip the
little messaging/beep features and stuff are fun. It overweights traffic and
underweights stop signs and lights. It's great for inter-city travel,
especially if you're a little familiar with the road.

But it's subject to flights of fancy similar to MapQuest circa 2002 where you
find yourself taking some strange back road to save little or no travel time.

~~~
DigitalJack
It does not give traffic enough weight for my commute. Waze is consistently
too optimistic in travel time by 10-15 minutes (25% of my commute if I hit
rush-hour).

With no traffic, it's spot on. I feel like it doesn't account for traffic that
develops during the commute. Given the length of my travel, the roads may be
clear when I start, but very congested before I finish.

------
timdellinger
It's in Google's best interest to keep the price high... it raises the price
for any potential competitor who might try to outbid them.

Google knows how much money it makes through iPhone... a potential competitor
could only guess how much money could be made by being the new default search
engine (especially since the number of people who would be loyal to Google and
switch away from the new default is a big unknown).

It's interesting to see exactly how valuable it is (or how valuable people
think it is) to be the market leader.

If Google lost the iPhone default position, their customers (i.e. advertisers)
would see them differently.

~~~
elihu
It's also a disincentive for Apple to make their own search engine.

~~~
ryanwaggoner
This really doesn't seem like something Apple would do. It's not in their DNA,
would be very tough to do while keeping their pro-privacy stance, and isn't
how they like to make money. I'd be very disappointed if they went down this
road.

~~~
elihu
I doubt that creating a new competitive search engine is quite as hard as
Google would like us to believe. Whether it's something Apple would do, I
don't have an opinion; in general I don't pay much attention to Apple.

They could conceivably setup a search engine as a pro-privacy move by
deliberately not collecting/monetizing user's search data, and perhaps not
even running ads at all if they can figure out some other way to pay for it or
justify the expense. However, I agree with you that it feels wrong. I think
I'd feel better about a new search engine if it was run by a less profit-
driven institution, like the Internet Archive.

Maybe the best course of action if Apple wanted a Google alternative to exist
is to develop some of the technology in-house and then give a giant grant to
some well-respected pro-privacy organization to actually run the thing.

~~~
sumedh
> I doubt that creating a new competitive search engine is quite as hard as
> Google would like us to believe.

MS, Yahoo and many others would disagree.

------
msoad
Apple is developing its search engine. If you use iOS search you might notice
there are results that are not either Bing or maps results. Map on its own
eats lots of Google's search share because people search on their iPhones for
locations and businesses a lot.

------
ksec
With iOS 11 you can type your Questions to Siri for results, replacing some of
your Searches. I remember vaguely that 80% of all searches are some specific
type that Apple could replicate in Siri "Should they choose to".

I think the End Game will be Apple providing very good, high quality curated
Search Results for its Users, Eating up to 40% of Google's Mobile revenue. (
80% of searches and 50% of Mobile Revenue coming from iPhone ).

That is, of course assuming Apple could do Searches or Services, judging from
the few years of Apple Map, Apple Music, iCloud etc. This segment is simply
not in their DNA.

Notes: Some may argue Apple's Services Revenue continues to increase, but if
you look at the break down majority of it are from App Store, and majority of
App Store Revenue are from Gaming, which ironically is a category Apple
doesn't care much.

------
slackoverflower
Pretty baffling that a few lines of code for a default setting could be worth
the GDP of a country...

~~~
jey
You're referring to cost, not value. The price charged here is for the value
of the effect, not for the cost of changing the few lines of code.

~~~
ancap
Yes, this is an excellent example which further debunks the labor theory of
value.

------
stephenr
Given Apple's recent public push on privacy, I keep expecting DDG to become
the new 'default' search engine in Safari.

~~~
27182818284
I think they'd be interested if the results were half as good as Googles. As
an experiment the last 6 months or so I've been using DDG at work and Google
at home. The difference in quality is very noticeable—Google still is the best
search engine.

~~~
JBReefer
Do you use the bang system in DDG? I think that more than makes up the
difference.

~~~
Sargos
If you have to remember to use arbitrary bangs to get specific results then
DDG has already failed as a search engine. Coding a query yourself is
obviously the most powerful way to search documents, but the key to useful
software is to do the hard work for you.

~~~
stephenr
Bangs dont 'get specific results' \- they're shortcuts to let you do site-
specific 'searches', _on_ that site.

So, if I want to check the versions of haproxy in the various Debian suites,
then `!dpkg haproxy` would take me to
[https://packages.debian.org/search?keywords=haproxy](https://packages.debian.org/search?keywords=haproxy).

If I just want general results about HAproxy, that isn't what a bang is for.

------
malchow
"Sacconaghi said that Google might decide to back away from paying Apple any
licensing fees if it feels confident enough that its search engine is so
popular Apple won't include any other option by default."

Wasn't there a period just a few years ago when Apple switched to Bing
platform wide? Or am I mistaken?

~~~
droopyEyelids
Siri currently defaults to Bing search, and that is not a setting that can be
changed.

If you want google you have to explicitly tell Siri to search using Google.

------
pasbesoin
Well, I'm dealing with a bootloop-ed Nexus 5X, with no help from Google nor
its manufacturer, LG.

My previous Android phone, a 2013 Moto X bought while Google owned the cell
phone part of Motorola and was promising users (finally) timely, consistent
updates, was largely abandoned with respect to updates within a year. This
also involved Verizon, for me, who was promising... finally, timely and
continuing updates, for this now Google phone -- no, really, believe us,
despite our history.

So... I guess Google better be paying _someone_ to maintain their presence in
mobile.

Maybe they should have paid _me_ and all their other Android users a little
better attention. Because I'm seriously considering an iPhone as a replacement
for my 5X brick.

~~~
CobrastanJorji
I saw an article with a proposed fix for this the other day. I have no idea
how correct it is, but it's probably worth trying if your phone is already a
brick. [https://www.xda-developers.com/nexus-5x-bootloop-fix-boot-
ph...](https://www.xda-developers.com/nexus-5x-bootloop-fix-boot-phone/)

~~~
pasbesoin
Thank you. I started briefly looking into possible remedies, but I haven't
gotten too far, yet. Lots of "maybes", it seems; and the likely need to pursue
them in the "right" order so as not to have one rule out another.

All from third parties. I haven't seen any useful, official response, yet --
except for some warranty replacements supposedly for units still under
warranty. (But then, bye-bye data...)

I'll have a look at your link, now. Appreciate it!

P.S. "Heat"... I've rather pampered my 5X, but I did -- with all the intention
of taking it in with me to the restaurant -- leave it in my car's dashboard
compartment for an half hour to an hour, where I had atypically placed it
while driving because the passenger seat was full of stuff. That compartment's
door closed itself while driving due to shaking and gravity, and I forgot.

It was cloudy when I went in, but sunnier when I came out, and the phone had
gotten pretty warm while still running. Not melty warm, and it was idling
during that time. My friends treat their phones far worse.

It seemed to be fine, when I came out. But now that I think about it, a few
days later, I experienced the bootloop.

Then again, the phone had spontaneously restarted 2 or 3 times in the past few
months, while I was using it. On those occasions, though, it promptly and
successfully rebooted.

The phone's only about 1.3 years old. I've heard some people have had success
claiming a replacement, even out of the official warranty. Seems to be a
matter of chance or/and reaching the right person.

------
sjg007
I thought the number one search term for all search engines is "google"..

~~~
giarc
Reminds me of a time I watched an admin assistant at my work perform a search.

1\. Open IE 6 (although this was only a few years ago, my org was slow to
upgrade).

2\. Use some weird in browser search tool and enters "Google"

3\. This brings up a Bing search results for "Google"

4\. Clicks on the first result, which is for the homepage of Google.com

5\. Enters original search term in Google.com

It's amazing what you can see when you watch users work.

~~~
badwolf
My mother called me crying once, because some software she installed changed
her homepage from google. She was crying because "Google was gone" and she
couldn't "search for www dot bankofamerica dot com"

~~~
giarc
I've co-founded a startup and we are blown away with what users come up with.
You think you've captured every corner case... but then someone new comes
along.

For example, we have a small CTA with email and location. I'm not sure one
person has entered both fields correctly.

------
nkkollaw
Mmm... I doubt they would set Bing or Yahoo as the default search engine and
alienate all their users.

Every time I use those SE, I realize how good Google is.

------
goldensnit
I wonder how much Yahoo pays oracle to put their goddamn awful malware on
chrome whenever i update java.

------
jondubois
When advertising companies start paying large sums of money to product
companies, you know that there is something wrong with the economy...

Money should flow from product companies to advertising companies; there is
something sinister about money moving in the opposite direction.

~~~
Method-X
Are there other examples of this happening, or is it just an isolated thing
with Google?

~~~
jondubois
At one point, a lot of mobile game companies (which make money from
advertising) bought up advertising space to advertise themselves - This is not
as bad though because money flows from advertising to advertising but it's
still weird.

~~~
Method-X
Not necessarily; it's just arbitrage. If they can get cheap advertising and it
converts well, then selling more expensive ads would make sense.

------
Animats
It has to look tempting to Apple to get into the search engine business. They
already have Siri, which is similar to the front end of a search engine.

------
arrty88
Would MSFT or Yahoo really pay more though?

~~~
jakobegger
If Google stopped paying, Apple could ask users during setup which search
engine they want to use, instead of using Google by default.

Right now you can choose in the settings app between Google, Bing, Yahoo and
Duck Duck Go, but only a small percentage of people change the setting.

If the setting was more prominent, and Google wasn’t the preselected first
option, Google would lose a lot of market share on iOS.

~~~
empath75
I really doubt that this is true. Google didn't just accidentally become the
search engine of choice for the internet. People chose to use it.

~~~
smhenderson
End users just don't always notice or care. Most search engines are reasonably
good at returning results for basic queries. As long is it's "good enough"
most people don't even notice they have a choice and make the switch. Sure,
you and I do, but as another poster said the HN demographic isn't the norm
here.

~~~
johnsmith21006
Not true in Mobile. Bing is not very good in comparison to Google. Then with
MS down to 6.5% share in the US for all devices it will just get worse.

[http://gs.statcounter.com/search-engine-market-
share/all/uni...](http://gs.statcounter.com/search-engine-market-
share/all/united-states-of-america)

------
rakshithbekal
Siri definitely shows bing results. I'm not sure Microsoft is paying for that

------
ars
Does Apple realistically have any other options? If not, why is Google paying
them?

~~~
HillaryBriss
serious question: what if Apple bought (something like) DuckDuckGo and
invested in it? could that form a good enough replacement?

~~~
ars
DuckDuckGo is just Bing with a filter. It's not a search engine in and of
itself, so there's nothing much there for Apple to buy.

~~~
ribosometronome
Are you sure of that? I get considerably different results for queries on Bing
vs DDG.

~~~
seanalltogether
I've just done a search for "fuengirola" which is a popular tourist
destination for people from the UK. Both on bing and duckduckgo. I have the
exact same results from both searches.

[http://imgur.com/P1akOab](http://imgur.com/P1akOab)

------
gigatexal
most users would switch it to google if apple switched it to bing or something
else meaning Google is paying them for just the ease of not having the risk of
not being default.

~~~
mrgordon
I don't think most users would switch. Don't forget how many users Internet
Explorer has since it comes preinstalled. And that's after a monopoly suit to
make it easier to choose a competitor.

Most people are not techies and are lazy. Sure maybe their kids will switch it
or their friend will tell them to do so, but MANY devices will stick with the
default.

~~~
gigatexal
my mom doesn't know how to use a computer, turn it on, navigate a GUI, but she
knows what the google logo looks like and if presented with something else
she'd chime in to have me or a coworker switch it for sure. So i disagree.

------
pix64
What else is Apple going to use Bing?

