19 ms·

Google is paying Apple billions per year to remain on the iPhone

212 points by pestkranker 9y ago

arrty88 9y ago
Would MSFT or Yahoo really pay more though?
- jakobegger 9y ago
  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 9y ago
    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.
    - Eridrus 9y ago
      Google was 10X better than alternatives when it was created and for a long time thereafter, but it's definitely not 10X better than Bing now. Google is not as dominant in other markets as the US.
      - tedeh 9y ago
        Actually Google is way more dominant outside of the US than in it, particularly in Europe (>90 % market share), as this 2015 Atlantic article about anti trust measures tells us about: https://www.theatlantic.com/technology/archive/2015/04/europeans-use-google-way-way-more-than-americans-do/390612/ https://www.theatlantic.com/technology/archive/2015/04/europ... In my native Sweden, using anything other than Google is pretty much unheard of. I believe the average American internet user is ahead of the curve in this respect, using Bing and other search engines which are probably as good for most queries as Google is.
        gommm 9y ago
        The thing is that Google is quite a bit better than Bing when it comes to localized search results outside of the US. I try to stay away from Google and use DDG but if I search for anything local outside, Google's results are much better than the competition
        Eridrus 9y ago
        You're right, I got the direction confused. Though Russia has low Google usage, probably due to Yandex. China also has very little usage, but I assume that it's more than just Baidu.
        kalleboo 9y ago
        And Japan has Yahoo! Japan (28% market share and stable)
    - kharms 9y ago
      It's interesting that your respect toward google doesn't extend to their decision to pay apple. I suspect google, being as good as they are with data, wouldn't pay apple if it didn't make sense.
    - smhenderson 9y ago
      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 9y ago
        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/united-states-of-america http://gs.statcounter.com/search-engine-market-share/all/uni...
    - justacat 9y ago
      I agree people choose Google, but at this point I expect I could switch search engines on a 100 people's phones, and you'd end up with a few categories: 1. People who don't even notice the change 2. People who notice, but are too lazy or ignorant to change it 3. People who notice, put off changing it, and leave it 4. People who notice, but consider searching results a commodity product at this point and don't care 5. People who notice, have a real preference AND actually change it back Obviously I'm too lazy to write all of the possibilities, but I find the differences in search engines to be less and less noticeable at this point. Of course, I have no actual expertise in search engines beyond personal experience so this is just me typing on the internet.
    - ocdtrekkie 9y ago
      You're right in that Google didn't just accidentally become the "search engine of choice for the Internet", but wrong in that "people chose to use it". Google started with paying other software companies to bundle Google Toolbar in with their software, which would change your default search to Google. (This behavior was later changed to Google Chrome, which you still get with a dozen other programs today.) This is actually a big part of Sundar Pichai's claim to fame at Google, and likely chiefly why he is CEO today: He's responsible for Google being the default place for search. As noted in this article, Google has been paying to be default on the iPhone for years, and Google used to be the highest bidder for Firefox's default search spot as well (and still is in several other countries besides the US). People use the default, and Google invested an incredible amount of money in ensuring they were the default everywhere. Google has been the default in both Chrome and Firefox for many years, and used the Toolbar to change people's default in IE, and has also been the default on both iOS and Android mobile phones. And that is why Google has the market share it does today.
      - johnsmith21006 9y ago
        Google is the dominate search because it is just a lot better. That was true over Altavista and true today. Saying anything otherwise is ridiculous. Heck MS owns PC and down to tiny share with Bing. Look at browsers in 2016 we had 300 million leave and mostly go to Google. http://www.businessinsider.com/300-million-users-ditched-microsoft-browsers-2016-11 http://www.businessinsider.com/300-million-users-ditched-mic... Over 300 million users ditched Microsoft's browsers in 2016 ...
  - telcodud 9y ago
    Is there any reason to believe that Apple would even have this setting, if Google stopped paying them billions? After all, there's no setting to use a different browser, maps app, etc., by default.
- frandroid 9y ago
  Yahoo is currently being sold for spare parts, and they're effectively out of the search business. Their search is mostly powered by Bing anyway. It would be a huge propaganda and traffic coup for MSFT to be the default search engine on iPhone. MSFT won't pay /more/ than Google (if they were currently willing to do so, they would already by the default), but if Google was to not pay, MSFT would definitely jump in and pay Apple something, which is better than nothing.
  - wodenokoto 9y ago
    Do you know what will happen to the Yahoo-Mozilla deal?
- moduspwnens14 9y ago
  It might already be priced just above what competitors are perceived to be willing to pay. For all we know, its actual value to Google is much higher than what they're paying, but with nobody else able or willing to pay what it's actually worth, they're able to pay much less. Another factor worth considering is that Apple's been pushing pretty strong for user privacy across the platform. It's possible they're leveraging that to extract more from Google, when other providers (like DuckDuckGo) might pay less, but be willing to offer better privacy protections.
ars 9y ago
Does Apple realistically have any other options? If not, why is Google paying them?
- mattnewton 9y ago
  Bing is always an option.
- HillaryBriss 9y ago
  serious question: what if Apple bought (something like) DuckDuckGo and invested in it? could that form a good enough replacement?
  - ars 9y ago
    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 9y ago
      Are you sure of that? I get considerably different results for queries on Bing vs DDG.
      - seanalltogether 9y ago
        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
    - stephenr 9y ago
      Their own site specifically says they use Bing, Yahoo, and Yandex, plus literally hundreds of other specific sources of data. https://duck.co/help/results/sources https://duck.co/help/results/sources
  - anindha 9y ago
myusernameisok 9y ago
> "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.
- HillaryBriss 9y ago
  for a rough assessment of this, we might compare it to the situation with Apple maps. In 2015, it was reported that "Apple ... receives 5 billion requests per week for its mapping services and that Apple Maps is used 3.5 times more frequently than ... Google Maps." http://fortune.com/2015/06/16/apple-google-maps-ios/ http://fortune.com/2015/06/16/apple-google-maps-ios/ and iOS users are the wealthy layer of the mobile marketplace. they're the cream. google doesn't want to lose them.
- loceng 9y ago
  Would they though? I would and perhaps many on HN, though HN demographic isn't the norm.
  - 27182818284 9y ago
    Google undoubtedly has some metrics on this which is why they do it. Other firms are the same way, right? For example, Yahoo and Firefox.
    - myusernameisok 9y ago
      Yes, I'm sure Google has analyzed this. I'm just saying it's fairly surprising considering that $3 billion hinges entirely on the assumption that people won't change the default. Apparently there are approximately 700 million active iPhones in the world [1], so Google is willing to bet $4 per user on that assumption. I'm not saying it's a bad assumption. [1] http://www.siliconbeat.com/2017/03/06/many-iphones-use-analyst-estimates-715-million-counting/ http://www.siliconbeat.com/2017/03/06/many-iphones-use-analy...
malchow 9y ago
"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 9y ago
  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.
- deleted 9y ago
  [deleted]
stephenr 9y ago
Given Apple's recent public push on privacy, I keep expecting DDG to become the new 'default' search engine in Safari.
- 27182818284 9y ago
  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 9y ago
    Do you use the bang system in DDG? I think that more than makes up the difference.
    - Sargos 9y ago
      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 9y ago
        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.
    - 27182818284 9y ago
      I do, but doing !g or !fl seems to defeat the purpose.
  - notzorbo3 9y ago
miket 9y ago
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-mobile-ad-revenue-world-leader-facebook-growth https://www.recode.net/2017/7/24/16020330/google-digital-mob...
- astrodust 9y ago
  It's less than the 30% Apple usually prefers as a cut, but they'll take it.
- likelynew 9y ago
  Many of the users will change default to google anyways. And I think it might even hurt apple a little to not use google as default search engine.
  - majani 9y ago
    You're greatly overestimating the number of users who change defaults in their software. It would be a huge hit to Google's mobile efforts for sure.
    - EduardoBautista 9y ago
      Google is orders of magnitude better than their competition in search. Apple's customers will be sure to complain if they default to any other search engine.
      - jbverschoor 9y ago
        I don't think that's the case anymore these days
        azakai 9y ago
        I agree. I've used Bing for a long time now, starting as an experiment to see how big the difference was. In practice the difference is very small, although once a week or so I'll need to use Google to search for something.
timdellinger 9y ago
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.
- gist 9y ago
  > Google knows how much money it makes through iPhone Doesn't always even matter. It's branding and advertising for google. Same type of thing as a company spending $5m on Superbowl ads. Idea isn't to ring up sales (or in the case of google clicks). Goodyear has the blimp nobody is buying tires directly my point being there is a value to the indirect advertising and marketing.
- elihu 9y ago
  It's also a disincentive for Apple to make their own search engine.
  - ryanwaggoner 9y ago
    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 9y ago
      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.
haterswillhate 9y ago
Google sensuring millions of accounts. Shame on you google and your political views, they suck!
intopieces 9y ago
>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
- krisroadruck 9y ago
  Perhaps apple users are significantly more likely to click on ads?
- victor106 9y ago
  Market Share does not represent Usage Share. It is a known fact that even though the market share of Android is more than iOS is used much more than Android and generate more quality earnings than Android. All app developers develop iOS first and make a disproportionate percentage of revenue on iOS than any other mobile platform
  - intopieces 9y ago
    Can you describe what more quality earnings means? Do you have a source for the breakdown of particular earnings (i.e., is this simply ad-clickthrough, or is there some dimension I'm not aware of?) I find this very interesting, not that the earnings are so high on Apple, but that Google could be failing so miserably to earn mobile search revenue on their own platform. I feel like there's an accounting error somewhere.
    - df388dfsa8f9 9y ago
      Same effect is seen in browsers, it is not uncommon for Safari users to have 50-100% higher conversion than the rest. The device choice ends up capturing different demographics (i.e. people who buy iPhones have more money to spend). Some first-hand reports: http://blog.monumentvalleygame.com/blog/2015/1/15/monument-valley-in-numbers http://blog.monumentvalleygame.com/blog/2015/1/15/monument-v... http://www.winterworks.de/bloo-kid-2-the-definitive-revenue-breakdown/ http://www.winterworks.de/bloo-kid-2-the-definitive-revenue-...
sjg007 9y ago
I thought the number one search term for all search engines is "google"..
- giarc 9y ago
  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 9y ago
    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 9y ago
      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.
jondubois 9y ago
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 9y ago
  Are there other examples of this happening, or is it just an isolated thing with Google?
  - jondubois 9y ago
    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 9y ago
      Not necessarily; it's just arbitrage. If they can get cheap advertising and it converts well, then selling more expensive ads would make sense.
- wodenokoto 9y ago
  Money flows from product companies to ad companies to owners of ad space, such as radio, website, tv, movies, billboards, sports teams, apps, etc.
- AndrewKemendo 9y ago
  Always has been the case. Ever heard of Lamar? They are one of the largest ad products companies which almost exclusively provides physical ad space. [1]http://www.lamar.com/ http://www.lamar.com/
- majani 9y ago
  There's nothing sinister here. Just large margins that can accomodate silly spending. But the margins are driven by justly earned efficiencies.
pasbesoin 9y ago
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 9y ago
  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-phone/ https://www.xda-developers.com/nexus-5x-bootloop-fix-boot-ph...
  - pasbesoin 9y ago
    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.
slackoverflower 9y ago
Pretty baffling that a few lines of code for a default setting could be worth the GDP of a country...
- jey 9y ago
  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 9y ago
    Yes, this is an excellent example which further debunks the labor theory of value.
goldensnit 9y ago
I wonder how much Yahoo pays oracle to put their goddamn awful malware on chrome whenever i update java.
msoad 9y ago
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.
davidf18 9y ago
Since a small percentage of users would change their default search, shouldn't Apple develop / buy (and improve) their own search engine to replace google. Most people won't know the difference, I'm betting. It seems to me that Apple is throwing away $25-3 = $22 billion per year.
nkkollaw 9y ago
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.
pix64 9y ago
What else is Apple going to use Bing?
Animats 9y ago
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.
gigatexal 9y ago
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 9y ago
  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 9y ago
    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.
ksec 9y ago
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.
rakshithbekal 9y ago
Siri definitely shows bing results. I'm not sure Microsoft is paying for that

212 points by pestkranker 9y ago

arrty88 9y ago

Would MSFT or Yahoo really pay more though?

jakobegger 9y ago
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 9y ago
  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.
  - Eridrus 9y ago
    Google was 10X better than alternatives when it was created and for a long time thereafter, but it's definitely not 10X better than Bing now. Google is not as dominant in other markets as the US.
    - tedeh 9y ago
      Actually Google is way more dominant outside of the US than in it, particularly in Europe (>90 % market share), as this 2015 Atlantic article about anti trust measures tells us about: https://www.theatlantic.com/technology/archive/2015/04/europeans-use-google-way-way-more-than-americans-do/390612/ https://www.theatlantic.com/technology/archive/2015/04/europ... In my native Sweden, using anything other than Google is pretty much unheard of. I believe the average American internet user is ahead of the curve in this respect, using Bing and other search engines which are probably as good for most queries as Google is.
      - gommm 9y ago
        The thing is that Google is quite a bit better than Bing when it comes to localized search results outside of the US. I try to stay away from Google and use DDG but if I search for anything local outside, Google's results are much better than the competition
      - Eridrus 9y ago
        You're right, I got the direction confused. Though Russia has low Google usage, probably due to Yandex. China also has very little usage, but I assume that it's more than just Baidu.
        kalleboo 9y ago
        And Japan has Yahoo! Japan (28% market share and stable)
  - kharms 9y ago
    It's interesting that your respect toward google doesn't extend to their decision to pay apple. I suspect google, being as good as they are with data, wouldn't pay apple if it didn't make sense.
  - smhenderson 9y ago
    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 9y ago
      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/united-states-of-america http://gs.statcounter.com/search-engine-market-share/all/uni...
  - justacat 9y ago
    I agree people choose Google, but at this point I expect I could switch search engines on a 100 people's phones, and you'd end up with a few categories: 1. People who don't even notice the change 2. People who notice, but are too lazy or ignorant to change it 3. People who notice, put off changing it, and leave it 4. People who notice, but consider searching results a commodity product at this point and don't care 5. People who notice, have a real preference AND actually change it back Obviously I'm too lazy to write all of the possibilities, but I find the differences in search engines to be less and less noticeable at this point. Of course, I have no actual expertise in search engines beyond personal experience so this is just me typing on the internet.
  - ocdtrekkie 9y ago
    You're right in that Google didn't just accidentally become the "search engine of choice for the Internet", but wrong in that "people chose to use it". Google started with paying other software companies to bundle Google Toolbar in with their software, which would change your default search to Google. (This behavior was later changed to Google Chrome, which you still get with a dozen other programs today.) This is actually a big part of Sundar Pichai's claim to fame at Google, and likely chiefly why he is CEO today: He's responsible for Google being the default place for search. As noted in this article, Google has been paying to be default on the iPhone for years, and Google used to be the highest bidder for Firefox's default search spot as well (and still is in several other countries besides the US). People use the default, and Google invested an incredible amount of money in ensuring they were the default everywhere. Google has been the default in both Chrome and Firefox for many years, and used the Toolbar to change people's default in IE, and has also been the default on both iOS and Android mobile phones. And that is why Google has the market share it does today.
    - johnsmith21006 9y ago
      Google is the dominate search because it is just a lot better. That was true over Altavista and true today. Saying anything otherwise is ridiculous. Heck MS owns PC and down to tiny share with Bing. Look at browsers in 2016 we had 300 million leave and mostly go to Google. http://www.businessinsider.com/300-million-users-ditched-microsoft-browsers-2016-11 http://www.businessinsider.com/300-million-users-ditched-mic... Over 300 million users ditched Microsoft's browsers in 2016 ...
- telcodud 9y ago
  Is there any reason to believe that Apple would even have this setting, if Google stopped paying them billions? After all, there's no setting to use a different browser, maps app, etc., by default.
frandroid 9y ago
Yahoo is currently being sold for spare parts, and they're effectively out of the search business. Their search is mostly powered by Bing anyway. It would be a huge propaganda and traffic coup for MSFT to be the default search engine on iPhone. MSFT won't pay /more/ than Google (if they were currently willing to do so, they would already by the default), but if Google was to not pay, MSFT would definitely jump in and pay Apple something, which is better than nothing.
- wodenokoto 9y ago
  Do you know what will happen to the Yahoo-Mozilla deal?
moduspwnens14 9y ago
It might already be priced just above what competitors are perceived to be willing to pay. For all we know, its actual value to Google is much higher than what they're paying, but with nobody else able or willing to pay what it's actually worth, they're able to pay much less. Another factor worth considering is that Apple's been pushing pretty strong for user privacy across the platform. It's possible they're leveraging that to extract more from Google, when other providers (like DuckDuckGo) might pay less, but be willing to offer better privacy protections.

ars 9y ago

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

mattnewton 9y ago
Bing is always an option.
HillaryBriss 9y ago
serious question: what if Apple bought (something like) DuckDuckGo and invested in it? could that form a good enough replacement?
- ars 9y ago
  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 9y ago
    Are you sure of that? I get considerably different results for queries on Bing vs DDG.
    - seanalltogether 9y ago
      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
  - stephenr 9y ago
    Their own site specifically says they use Bing, Yahoo, and Yandex, plus literally hundreds of other specific sources of data. https://duck.co/help/results/sources https://duck.co/help/results/sources
- anindha 9y ago

myusernameisok 9y ago

> "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.

HillaryBriss 9y ago
for a rough assessment of this, we might compare it to the situation with Apple maps. In 2015, it was reported that "Apple ... receives 5 billion requests per week for its mapping services and that Apple Maps is used 3.5 times more frequently than ... Google Maps." http://fortune.com/2015/06/16/apple-google-maps-ios/ http://fortune.com/2015/06/16/apple-google-maps-ios/ and iOS users are the wealthy layer of the mobile marketplace. they're the cream. google doesn't want to lose them.
loceng 9y ago
Would they though? I would and perhaps many on HN, though HN demographic isn't the norm.
- 27182818284 9y ago
  Google undoubtedly has some metrics on this which is why they do it. Other firms are the same way, right? For example, Yahoo and Firefox.
  - myusernameisok 9y ago
    Yes, I'm sure Google has analyzed this. I'm just saying it's fairly surprising considering that $3 billion hinges entirely on the assumption that people won't change the default. Apparently there are approximately 700 million active iPhones in the world [1], so Google is willing to bet $4 per user on that assumption. I'm not saying it's a bad assumption. [1] http://www.siliconbeat.com/2017/03/06/many-iphones-use-analyst-estimates-715-million-counting/ http://www.siliconbeat.com/2017/03/06/many-iphones-use-analy...

malchow 9y ago

"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 9y ago
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.
deleted 9y ago
[deleted]

stephenr 9y ago

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

27182818284 9y ago
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 9y ago
  Do you use the bang system in DDG? I think that more than makes up the difference.
  - Sargos 9y ago
    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 9y ago
      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.
  - 27182818284 9y ago
    I do, but doing !g or !fl seems to defeat the purpose.
- notzorbo3 9y ago

miket 9y ago

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

astrodust 9y ago
It's less than the 30% Apple usually prefers as a cut, but they'll take it.
likelynew 9y ago
Many of the users will change default to google anyways. And I think it might even hurt apple a little to not use google as default search engine.
- majani 9y ago
  You're greatly overestimating the number of users who change defaults in their software. It would be a huge hit to Google's mobile efforts for sure.
  - EduardoBautista 9y ago
    Google is orders of magnitude better than their competition in search. Apple's customers will be sure to complain if they default to any other search engine.
    - jbverschoor 9y ago
      I don't think that's the case anymore these days
      - azakai 9y ago
        I agree. I've used Bing for a long time now, starting as an experiment to see how big the difference was. In practice the difference is very small, although once a week or so I'll need to use Google to search for something.

timdellinger 9y ago

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.

gist 9y ago
> Google knows how much money it makes through iPhone Doesn't always even matter. It's branding and advertising for google. Same type of thing as a company spending $5m on Superbowl ads. Idea isn't to ring up sales (or in the case of google clicks). Goodyear has the blimp nobody is buying tires directly my point being there is a value to the indirect advertising and marketing.
elihu 9y ago
It's also a disincentive for Apple to make their own search engine.
- ryanwaggoner 9y ago
  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 9y ago
    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.

haterswillhate 9y ago

Google sensuring millions of accounts. Shame on you google and your political views, they suck!

intopieces 9y ago

>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

krisroadruck 9y ago
Perhaps apple users are significantly more likely to click on ads?
victor106 9y ago
Market Share does not represent Usage Share. It is a known fact that even though the market share of Android is more than iOS is used much more than Android and generate more quality earnings than Android. All app developers develop iOS first and make a disproportionate percentage of revenue on iOS than any other mobile platform
- intopieces 9y ago
  Can you describe what more quality earnings means? Do you have a source for the breakdown of particular earnings (i.e., is this simply ad-clickthrough, or is there some dimension I'm not aware of?) I find this very interesting, not that the earnings are so high on Apple, but that Google could be failing so miserably to earn mobile search revenue on their own platform. I feel like there's an accounting error somewhere.
  - df388dfsa8f9 9y ago
    Same effect is seen in browsers, it is not uncommon for Safari users to have 50-100% higher conversion than the rest. The device choice ends up capturing different demographics (i.e. people who buy iPhones have more money to spend). Some first-hand reports: http://blog.monumentvalleygame.com/blog/2015/1/15/monument-valley-in-numbers http://blog.monumentvalleygame.com/blog/2015/1/15/monument-v... http://www.winterworks.de/bloo-kid-2-the-definitive-revenue-breakdown/ http://www.winterworks.de/bloo-kid-2-the-definitive-revenue-...

sjg007 9y ago

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

giarc 9y ago
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 9y ago
  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 9y ago
    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.

jondubois 9y ago

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 9y ago
Are there other examples of this happening, or is it just an isolated thing with Google?
- jondubois 9y ago
  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 9y ago
    Not necessarily; it's just arbitrage. If they can get cheap advertising and it converts well, then selling more expensive ads would make sense.
wodenokoto 9y ago
Money flows from product companies to ad companies to owners of ad space, such as radio, website, tv, movies, billboards, sports teams, apps, etc.
AndrewKemendo 9y ago
Always has been the case. Ever heard of Lamar? They are one of the largest ad products companies which almost exclusively provides physical ad space. [1]http://www.lamar.com/ http://www.lamar.com/
majani 9y ago
There's nothing sinister here. Just large margins that can accomodate silly spending. But the margins are driven by justly earned efficiencies.

pasbesoin 9y ago

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 9y ago
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-phone/ https://www.xda-developers.com/nexus-5x-bootloop-fix-boot-ph...
- pasbesoin 9y ago
  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.

slackoverflower 9y ago

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

jey 9y ago
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 9y ago
  Yes, this is an excellent example which further debunks the labor theory of value.

goldensnit 9y ago

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

msoad 9y ago

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.

davidf18 9y ago

Since a small percentage of users would change their default search, shouldn't Apple develop / buy (and improve) their own search engine to replace google. Most people won't know the difference, I'm betting. It seems to me that Apple is throwing away $25-3 = $22 billion per year.

nkkollaw 9y ago

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.

pix64 9y ago

What else is Apple going to use Bing?

Animats 9y ago

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.

gigatexal 9y ago

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 9y ago
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 9y ago
  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.

ksec 9y ago

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.

rakshithbekal 9y ago

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