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Apple, Google and a Deal That Controls the Internet

345 points by justinzollars 6y ago

herunan 6y ago
I knew Google paid Apple for preferential treatment on search, but enough to account 14-21% of Apple’s profit? Wow.
- dragontamer 6y ago
  I think this is a time to use revenue instead of profits. Apple has many sources of money, all of which contributes to profits. $260 Billion in revenue in 2019, so that's ~4% of Apple's revenue.
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  - ffggvv 6y ago
    why? im guessing this decision costs them close to 0 dollars to implement so the full payment goes towards their profits?
    - tptacek 6y ago
      That's not how it works. If not for all the investment Apple did on their platform, it wouldn't be worth $8-12B from Google in the first place.
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      - mythz 6y ago
        It is when it's already a sunk cost that would've already been invested even without the search deal, resulting in the incremental cost to add a Google default next to zero. There's no reason for this recurring payment to be compared against revenue when it's essentially pure-profit contribution that cost Apple close to 0 marginal cost to implement.
        lotsofpulp 6y ago
        As tptacek pointed out, it did not cost Apple close to 0 marginal cost to implement. Apple spent a lot and continues to spend a lot to retain its enormous share of wealthy users, which is why Google pays as much as it does to be default. Exactly how much to attribute is probably impossible to calculate, but certainly not close enough to zero to call it pure profit.
        simonh 6y ago
        It cost Mozilla 0 marginal costs to make google their default search engine, yet it was their primary source of revenue and funded their organisation almost entirely for many years. That certainly didn't make all their google search bar revenue profit. Also as Apple sell more devices they can and do charge Google more, so making better phones and marketing them well, both of which incur costs, earns more search bar revenue. That's direct causal line between costs and that revenue. The fact they also have other revenue doesn't change that. Whole companies have failed because the owners bought that fallacy and fundamentally misunderstood how their own business worked.
      - formercoder 6y ago
        Were we to think about the pro forma AAPL sans the payments, it’d come out of revenue, and then we’d pull 100% of it out of profit, and probably add a bit more of a hit for the inevitable R&D done to start working on their own search.
      - cblconfederate 6y ago
        That doesn't make any sense. Does it mean the profit from the deal should be written off as business expenses?
    - dragontamer 6y ago
      > why? im guessing this decision costs them close to 0 dollars to implement so the full payment goes towards their profits? Profits are "Revenue - Recurring Costs - One-time-Costs". Since this decision costs them $0, why do you want to put costs into the denominator? ~4% == $10 Billion / Revenue Or: ~20% == $10 Billion / (Revenue - RecurringCosts - OneTimeCosts). Which number looks more correct to you? I guess it depends on how you use the number, but from my perspective, the lack of costs means that its more logical to compare it to Revenue as a whole. Note: Operating Profit is "Revenue-RecurringCosts" (without one-time-costs associated). Operating Profit would be "more correct" if this were a hypothetical decision with recurring costs. (The one-time-costs would just muddle the discussion).
    - simonh 6y ago
      Why not say that money goes towards paying employees, or server farm costs? You can’t say that this revenue here goes to this cost, or that revenue there goes to another cost, and some other revenue is special because that’s the profit. Apple made this deal with Google before the iPhone was even launched and arguably among the first revenue sources they ever had, and the revenue from it has risen as the value of that search bar has risen, along with their other revenue. It’s plausible to argue it’s enabled them to invest more in developing the phones and iOS, so without it their expenses might have been lower. Another thing to consider is if Apple didn’t sell this deal to Google, they’d probably be making a deal with Microsoft to replace it with Bing, or Yandex in Russia, or whatever. It doesn’t only have value to Google, they might make less but still it would be a lot, so really the revenue that’s uniquely ‘Googly’ from an Apple perspective is just the delta of the extra they make from Google.
      - treis 6y ago
        >Why not say that money goes towards paying employees, or server farm costs? Because they don't have to pay (almost) any employees or server farms to make Google the default.
        simonh 6y ago
        Was the same true when the Google deal money was the only money they had made, as I pointed out, before they sold a single iPhone? Was it pure profit then? We have an exact counter example. When Mozilla was almost entirely dependent on Google search bar revenue would you say the same thing of them? By definition it’s all profit because it cost nothing to make Google the default ... except most of it went to pay operational costs because their other revenue was very small. Even supposing they then get more other revenue from other sources, you can’t suddenly say search bar revenue has switched from going here to going there. It doesn’t make any sense. Also the Google revenue to Apple has scaled with devices sold, sell no devices make no Google money. Increase sales and you can demand more from google. It’s all predicated on making and selling devices, which takes people.
  - JumpCrisscross 6y ago
    > this is a time to use revenue instead of profits Totally the opposite. Capital projects are greenlit on profits. The profits Google delivers to Apple are a better argument against it building its own search engine than the revenues.
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- xenadu02 6y ago
  AFAIK there is no actual public info on what the dollar amount is (I certainly don't know what it is). The house report says they don't know how much Google pays and they pulled the numbers from a story on the web that was guessing. So as of right now no one knows what the revenue or profit is.
  - manquer 6y ago
    we do know the number was 1B in 2014 when oracle blurted it out in court. We know Mozilla's numbers for a similar type of deal from that era and now. We also how market share and absolute devices have trended from 2014 to now. Apple' s dominance in mobile and mobile as platform having a larger impact on search then web. Putting it altogether 8-12B is a fair estimate. To see it another way, if google is ready to pay mozilla $500 M / year with a browser in single digit market share and predominant presence only in web, 20x to apple is pretty easy
sparker72678 6y ago
The irony of the suit will be when Google is barred from paying for preferential treatment, then everyone chooses them as the default anyway, saving Google billions of dollars per year while leaving their 95% market share untouched. Who had Apple down on their betting sheet as the biggest loser from a Google anti-trust lawsuit?
- ffggvv 6y ago
  apple actually did use bing for siri search results up until 2017 when google started bribing them
- matwood 6y ago
  Sort of. Google is paying Apple to not doing something else. When 8-12B is gone, Apple loses the incentive to not make something like DDG the default or build or buy their own search engine.
  - tptacek 6y ago
    The fact that DDG is grossly inferior to Google is a pretty strong incentive.
    - gogopuppygogo 6y ago
      Have you used it lately? It’s on par or better for 99% of what I use it for (tech, real estate, and advocacy).
      - tptacek 6y ago
        I have. Also, I just checked my browser history of searches against DDG. I stand by what I said. What they're doing is impressive, but that's not the same thing as saying that they're on the same level of result quality as Google.
      - kevin_thibedeau 6y ago
        I have to use !g a lot because of inferior results from the default search. It can be tough to even get a relevant wikipedia entry to show up in the top 5.
phkahler 6y ago
Pay to play was made illegal in radio, why is it OK here?
- gogopuppygogo 6y ago
  Radio spectrum is owned by the public and licensed. iPhone is private.
- javajosh 6y ago
  Well now, that is an interesting question! I don't know much about the historical use of "payola" that record labels would pay DJs to play their songs. It's interesting that the libertarians would say "So what?" Most of us though would recognize the conflict-of-interest, just like we require people to at least tell us that certain speech is paid. Maybe that's the comprimise that would work here - Apple would keep Google as the default, but add a clear notice that they'd been paid, and how much. "Keep default search? Google paid us 12B USD for this value, are you sure?" Maybe it will get people questioning why the Goog wants search traffic so badly. And ad traffic. And DNS traffic. And video consumption traffic. And...
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ChuckMcM 6y ago
And I suspect this is why Apple doesn't implement its own search index / service. If I were at Apple and I had payments like this coming in, I would absolutely take $1B/year off to fund building a search engine. This because Google can 'turn off' this at any moment, so having that be a non-threat would be useful. Further there is a tremendous amount of value in crawling the web in terms of data set generation. And finally it really would allow them to build knowledge bases that would enable Siri to be more effective as a verbal assistant. But while the cash is pouring in like that? Well just ride that fountain of cash for as long as you can.
- dheera 6y ago
  > 'turn off' this at any moment You could always switch to Bing, which isn't really that bad as a Google replacement. In all seriousness though why would Google want to ever turn itself off for Apple devices? That would backfire horribly.
  - yeetman21 6y ago
    Bing is owned by microsoft
    - dheera 6y ago
      Sure, but Microsoft would probably be more than happy to scoop up any market holes left behind by Google. Google decided to ditch China by not cooperating with the government. Bing decided to cooperate and is happily unblocked there.
  - ChuckMcM 6y ago
    The way I think about it, Google's interests aren't aligned with Apple's interests. Think about the money that Apple has invested in their own bespoke ARM chips. They could have stuck with Broadcom or Samsung chips for the iPhone but they didn't. They wanted things that they couldn't get access to through a supplier, and a competitive advantage. If I were an executive at Apple I would look at the risk every supplier contributed to overall profitability and margins. And I would look to see how much value I could capture for Apple vs paying it out to third parties. So for me the question is about "How much of the user experience can I ensure will meet my standards?" and having your own search engine would help there. There are other values as well when you can make large scale semantic queries against the entire web. And it can be extremely lucrative to tie the "search experience" as a feeder into your other products (which is part of what the Justice department doesn't like about Google)
dang 6y ago
Url changed from https://twitter.com/kashhill/status/1320387328817451009 https://twitter.com/kashhill/status/1320387328817451009, which points to this.
jeffbee 6y ago
I assume the "you are the product" parrot army will roll into these comments in a moment. Apple sells iOS users' attention for ten billion dollars a year. Clearly, you are the product.
- corobo 6y ago
  Looks like you're leading the charge solo chief
  - jeffbee 6y ago
    Right? It's almost like there are two standards.
mensetmanusman 6y ago
Based on how poorly Siri searches, I do hope Apple has been putting some billions towards making a reasonable search engine once google is gone.
- immy 6y ago
  https://appleinsider.com/articles/20/08/27/apple-may-launch-its-own-web-based-search-engine https://appleinsider.com/articles/20/08/27/apple-may-launch-...
neonate 6y ago
https://archive.is/UkSW4 https://archive.is/UkSW4
jtsiskin 6y ago
“Apple and Google’s parent company, Alphabet, worth more than $3 trillion combined, do compete on plenty of fronts, like smartphones, digital maps and laptops.” This line makes it sound like Apple and Google have the same parent company. Should it read “Apple, and Google’s...”
- dragonwriter 6y ago
  What is written is correct, and your additional punctuation doesn't improve it, but it uses poorly chosen wording. It would be better to just use the simple names as the main items in the list, and say “Apple and Alphabet, Google’s parent company, [...]”
supernova87a 6y ago
I think, as with all anti-trust/anti-competitive questions, if you define the scope wrong then of course the entity claiming unfair practices can be positioned to win. "A deal that controls the internet" is really a pretty sweeping claim! Is the question whether this deal prevents companies from developing and selling their search solution? If so, then is Google paying Apple, who has what, 40% market share of mobile phones, really able to stifle the development of search engines? With search on mobile phones being a further x% fraction of all (general, browser-opening) search being done on the internet? I.e. when placed with desktop, tablet, browser window search as well. If we're down to perhaps low double digit % of all search, how it that unfairly preventing competition? And yes, if you then go to the opposite extreme and say that the market is search on Safari on iPhones, then the market is cornered and controlled by Google. But is that reasonable to define as the market in question? Where you're entitled to not have anti-competitive behavior? That's Peter Thiel's example of having cornered the market for British food in downtown Palo Alto and prevented competitors from moving into your rented space. It may be a sweetheart deal for Apple, and Google making sure that it gets preferred treatment in this one corner of the internet, but it seems to me hard to claim that this has stifled competition for the development of search engines in general?
- jbay808 6y ago
  > If so, then is Google paying Apple, who has what, 40% market share of mobile phones, really able to stifle the development of search engines? Isn't the other 60% basically just (Google's) Android? And I think these days, search engines aren't just developed by someone coding up a clever algorithm in their garage; they improve based on data from being used a lot. So yes, it would be an obstacle to competitors.
  - supernova87a 6y ago
    Then why didn't they go after that instead? That's even more blatant if so. > And I think these days, search engines aren't just developed by someone coding up a clever algorithm in their garage; they improve based on data from being used a lot. So yes, it would be an obstacle to competitors. Wait, now we need to make sure others can develop a good search engine? That's what fairness in competition is? That's a whole new level of argument. I cannot imagine a court wanting to step into that territory.
zenexer 6y ago
I know I’m nitpicking, but this just doesn’t add up: > Nearly half of Google’s search traffic now comes from Apple devices, according to the Justice Department > The Justice Department, which is asking for a court injunction preventing Google from entering into deals like the one it made with Apple, argues that the arrangement has unfairly helped make Google, which handles 92 percent of the world’s internet searches, the center of consumers’ online lives. What? Worldwide, iOS market share is peanuts compared to Android. Depending on the report, the exact amount varies pretty widely, but nothing ever seems to report more than 18-ish percent worldwide. macOS is negligible. Meanwhile, Android’s market share is enormous. Android devices alone—worldwide—could easily account for half of Google’s search traffic, especially when you consider countries like India. But the DOJ wants to argue that: 1. Google handles 92% of global search traffic 2. Half of Google’s traffic comes from Apple devices If we believe that 92% figure, that places a generous upper limit of Google’s search traffic originating from Apple devices at about 20%, far short of “nearly half.” Look, I hate the monopolistic nature of search just as much as the next person, but can we please double-check that our numbers actually make sense?
- 1over137 6y ago
  Maybe the USDOJ cares more about US numbers, not worldwide ones? iOS is surely more than 18% in the USA.
  - fmajid 6y ago
    They do, and also it makes a better case than worldwide where Google is kneecapped by the Chinese government to benefit Bandung, or Russia where Yandex is a strong competitor.
- ocdtrekkie 6y ago
  Pretty sure the "over half" figure refers to traffic in the US, where iOS is around half of mobile devices, unlike the global market where Android has a definite monopoly outside the US. The DOJ legislates largely based on US figures, but noting Google's global power is hard to ignore completely.
mgreg 6y ago
It is an interesting exercise to look at the barriers to entry for search engines. Clearly there are technology challenges (internet scale web crawler, indexer, search interface, ad technology) but these are not novel challenges anymore. Funding is an issue as operating a general search index is likely very expensive with high upfront investment. Marginal costs are nearly zero as the major expense is likely fixed (crawling and indexing the internet) while variable costs are a small percentage (serving search results for each request). Google, like Nike, Gucci, and Procter & Gamble, has spent billions to build their brand perception and cement the habit of using their products despite there often being minimal actual differences between competitive products. But the critical one really does seem to be attracting new users. The history of DDG, ClickZ, Bing all seem to validate this. Just getting a user to _try_ a new search engine is very difficult despite it being "one click away." Certainly a deal with a browser maker / mobile manufacturer would aid this but it's priced amazingly out of the reach of competitors denying perhaps the most obvious way to get trials and traffic. Google clearly knows this. How can it be true that switching is so easy ("just a click away") as to suggest that being the default is meaningless, and yet pay >$8 billion a year to be that default.
- post_below 6y ago
  You're missing the most novel technology: ranking. Without that everything else is pretty much useless (which is why DDG primarily republishes Bing results). You're right that drawing users is a big challenge, but privacy gives you a way in there (again DDG). It just isn't enough if you can't provide better results. Google works hard to maintain their dominance on a lot of fronts, some questionable and in need of regulation, but the biggest reason for their position is, as it always was, ranking algos. Which is extremely expensive in engineering time because ranking isn't static but rather a constant war with gaming.
  - mgreg 6y ago
    Thanks for pointing out ranking search results as a technology investment required; I tend to think of it as part of indexing but a good call out. I purposely didn't want to go down the "quality" rat hole because that tends to devolve into subjective opinions (see DDG threads throughout HN). My personal, subjective opinion is that blind tests would likely reveal very little differences and thus justify their major investment in brand advertising made by Google. (not blind but compare https://duckduckgo.com/?q=best+wallpaper https://duckduckgo.com/?q=best+wallpaper with https://www.google.com/search?q=best+wallpaper; https://www.google.com/search?q=best+wallpaper; do you really want 3 pinterest results to this query; this is the burden of being the dominant search engine - you're the one people will game) --edited for typos
om2 6y ago
The biggest source of Google search traffic is doubtless Chrome, and Google doesn’t have to make a deal for that.
Lammy 6y ago
> “We have this sort of strange term in Silicon Valley: co-opetition,” said Bruce Sewell, Apple’s general counsel from 2009 to 2017. The word "cartel" already exists.
PrinceKropotkin 6y ago
I'm all for anti-trust action, and especially legislation, against Google and other large corporations with app stores and ads and other things perverting otherwise decent product interactions. But this just seems like a terrible way to frame the nature of Google's anti-consumer behavior.
cryptica 6y ago
What bothers me the most is that of all the anti-competitive activities which Apple and Google engage in, this is the one which is given the most attention in the media. It's a bit of a stretch to claim that DuckDuckGo is 'the little guy'. Yes, DuckDuckGo is small relative to Google, but it's still an insanely successful company. Imagine what Google is doing to millions of small businesses by slightly tweaking its algorithm every few months... That's the real damage. These are the real casualties. We're taking the focus away from millions of casualties who experience real suffering and directing it towards a single company which is doing well anyway. The pain of the actual 'little guy' is 100x what the CEO of DuckDuckGo feels. It's total and absolute hopelessness.
- Google234 6y ago
  When Google tweaks its algorithms, some other business will win if another suffers. I would imagine changes are done for a reason, e.g. site A has better reviews than site B.
  - cryptica 6y ago
    Exactly. What kinds of businesses tend to win? Businesses which benefit Google and Google insiders. That means big corporations which Google has long term advertising deals with, VC-backed startups which Google plans to acquire at a discount and other businesses which have a connection to Google insiders (startup of the project manager's friend, ...). I'm not suggesting that they tweak the algorithm to benefit specific websites (they probably don't), but they tweak it to favor certain characteristics which, on the whole, benefit Google and Google insiders. Don't forget that Google employees are not a representative sample of the population by any measure. What kinds of businesses tend to lose? Businesses that are not affiliated with Google or Google insiders. Independent projects. The reason why people at Google don't acknowledge that this is happening is because the harm is literally being inflicted on those businesses which are in Google's blind spots so they don't even see the problems... Except on rare occasions when they are shocked to realize that 50% of the population voted for Trump.
strangeattractr 6y ago
Only on here could people say that the engineering challenges Google faces in delivering search are 'solved problems' that could be easily mimicked. I get that people don't like the surveillance tech business model, I don't really like it myself. But we can't just pretend that the personal data that they gather to serve you ads more effectively isn't also the reason their search results, at least in my experience, are better than their competitors'.
- manquer 6y ago
  It not a solved for you and me. It is a solved problem for big tech , apple already has one with siri suggested site. Just like maps. Apple one day decided google maps is no longer thr default and implemented their own. Sure they had bad early years and hilarious issues, however they are on par or comparable to google maps today.
- tsjq 6y ago
  You referring to the "filter bubble" thing?
ncmncm 6y ago
That the numbers don't seem to add up probably means you are misinterpreting them. Apple has half the phone business by revenue, not by number of phones, never mind by value delivered. But to advertisers, that is the number that matters. Apple customers are extra-valuable to pitch to, because they have already demonstrated that (1) price doesn't matter to them (or they would have a different phone), (2) they are easily satisfied (or they would have a different phone), (3) they are readily manipulated (or they...), and (4) they are especially status-conscious (...). All those qualities make them what business schools like to call "cash cows" (yes, really) that can be milked indefinitely. Apple is renting them out to Google at a high rate. Google knows that practically all iphone users would never change the search engine on their own initiative, because iphone users have been very carefully trained, over the years, to take exactly what Apple dishes out and learn to like it. Apple knows that renting out their customers doesn't cost Apple direct income, because they have already spent on everything Apple has. Knowing that somebody is an Apple user, you can offer them top-drawer prices and they will pay, provided a high-status logo is attached, and feel smug about having paid it. They are buying "price-signaling" mojo, so they don't demand commensurate value, and are cheap to cater to.
- discordance 6y ago
  > (1) price doesn't matter to them (or they would have a different phone) I’m an iPhone user and price matters to me. Status means little to me. Privacy is my priority and number one reason I use an iPhone. Apple is not an advertising company, and doesn’t make a buck selling my data. FYI my mobile search default is DDG.
  - lotsofpulp 6y ago
    It’s amazing that people carry on with the trope even after Apple brings out a $400 iPhone. Not to mention iPhones have received software updates for far longer than anyone else for over a decade and they clearly have the lowest amortized costs.
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known 6y ago
US "companies" are colonizing countries https://en.wikipedia.org/wiki/List_of_public_corporations_by_market_capitalization https://en.wikipedia.org/wiki/List_of_public_corporations_by... Prior to that UK attacked/colonized 9 out of 10 countries https://www.telegraph.co.uk/history/9653497/British-have-invaded-nine-out-of-ten-countries-so-look-out-Luxembourg.html https://www.telegraph.co.uk/history/9653497/British-have-inv...
Sarbashish 6y ago
This is huge news.

345 points by justinzollars 6y ago

herunan 6y ago

I knew Google paid Apple for preferential treatment on search, but enough to account 14-21% of Apple’s profit? Wow.

dragontamer 6y ago
I think this is a time to use revenue instead of profits. Apple has many sources of money, all of which contributes to profits. $260 Billion in revenue in 2019, so that's ~4% of Apple's revenue.
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- ffggvv 6y ago
  why? im guessing this decision costs them close to 0 dollars to implement so the full payment goes towards their profits?
  - tptacek 6y ago
    That's not how it works. If not for all the investment Apple did on their platform, it wouldn't be worth $8-12B from Google in the first place.
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    - mythz 6y ago
      It is when it's already a sunk cost that would've already been invested even without the search deal, resulting in the incremental cost to add a Google default next to zero. There's no reason for this recurring payment to be compared against revenue when it's essentially pure-profit contribution that cost Apple close to 0 marginal cost to implement.
      - lotsofpulp 6y ago
        As tptacek pointed out, it did not cost Apple close to 0 marginal cost to implement. Apple spent a lot and continues to spend a lot to retain its enormous share of wealthy users, which is why Google pays as much as it does to be default. Exactly how much to attribute is probably impossible to calculate, but certainly not close enough to zero to call it pure profit.
      - simonh 6y ago
        It cost Mozilla 0 marginal costs to make google their default search engine, yet it was their primary source of revenue and funded their organisation almost entirely for many years. That certainly didn't make all their google search bar revenue profit. Also as Apple sell more devices they can and do charge Google more, so making better phones and marketing them well, both of which incur costs, earns more search bar revenue. That's direct causal line between costs and that revenue. The fact they also have other revenue doesn't change that. Whole companies have failed because the owners bought that fallacy and fundamentally misunderstood how their own business worked.
    - formercoder 6y ago
      Were we to think about the pro forma AAPL sans the payments, it’d come out of revenue, and then we’d pull 100% of it out of profit, and probably add a bit more of a hit for the inevitable R&D done to start working on their own search.
    - cblconfederate 6y ago
      That doesn't make any sense. Does it mean the profit from the deal should be written off as business expenses?
  - dragontamer 6y ago
    > why? im guessing this decision costs them close to 0 dollars to implement so the full payment goes towards their profits? Profits are "Revenue - Recurring Costs - One-time-Costs". Since this decision costs them $0, why do you want to put costs into the denominator? ~4% == $10 Billion / Revenue Or: ~20% == $10 Billion / (Revenue - RecurringCosts - OneTimeCosts). Which number looks more correct to you? I guess it depends on how you use the number, but from my perspective, the lack of costs means that its more logical to compare it to Revenue as a whole. Note: Operating Profit is "Revenue-RecurringCosts" (without one-time-costs associated). Operating Profit would be "more correct" if this were a hypothetical decision with recurring costs. (The one-time-costs would just muddle the discussion).
  - simonh 6y ago
    Why not say that money goes towards paying employees, or server farm costs? You can’t say that this revenue here goes to this cost, or that revenue there goes to another cost, and some other revenue is special because that’s the profit. Apple made this deal with Google before the iPhone was even launched and arguably among the first revenue sources they ever had, and the revenue from it has risen as the value of that search bar has risen, along with their other revenue. It’s plausible to argue it’s enabled them to invest more in developing the phones and iOS, so without it their expenses might have been lower. Another thing to consider is if Apple didn’t sell this deal to Google, they’d probably be making a deal with Microsoft to replace it with Bing, or Yandex in Russia, or whatever. It doesn’t only have value to Google, they might make less but still it would be a lot, so really the revenue that’s uniquely ‘Googly’ from an Apple perspective is just the delta of the extra they make from Google.
    - treis 6y ago
      >Why not say that money goes towards paying employees, or server farm costs? Because they don't have to pay (almost) any employees or server farms to make Google the default.
      - simonh 6y ago
        Was the same true when the Google deal money was the only money they had made, as I pointed out, before they sold a single iPhone? Was it pure profit then? We have an exact counter example. When Mozilla was almost entirely dependent on Google search bar revenue would you say the same thing of them? By definition it’s all profit because it cost nothing to make Google the default ... except most of it went to pay operational costs because their other revenue was very small. Even supposing they then get more other revenue from other sources, you can’t suddenly say search bar revenue has switched from going here to going there. It doesn’t make any sense. Also the Google revenue to Apple has scaled with devices sold, sell no devices make no Google money. Increase sales and you can demand more from google. It’s all predicated on making and selling devices, which takes people.
- JumpCrisscross 6y ago
  > this is a time to use revenue instead of profits Totally the opposite. Capital projects are greenlit on profits. The profits Google delivers to Apple are a better argument against it building its own search engine than the revenues.
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xenadu02 6y ago
AFAIK there is no actual public info on what the dollar amount is (I certainly don't know what it is). The house report says they don't know how much Google pays and they pulled the numbers from a story on the web that was guessing. So as of right now no one knows what the revenue or profit is.
- manquer 6y ago
  we do know the number was 1B in 2014 when oracle blurted it out in court. We know Mozilla's numbers for a similar type of deal from that era and now. We also how market share and absolute devices have trended from 2014 to now. Apple' s dominance in mobile and mobile as platform having a larger impact on search then web. Putting it altogether 8-12B is a fair estimate. To see it another way, if google is ready to pay mozilla $500 M / year with a browser in single digit market share and predominant presence only in web, 20x to apple is pretty easy

sparker72678 6y ago

The irony of the suit will be when Google is barred from paying for preferential treatment, then everyone chooses them as the default anyway, saving Google billions of dollars per year while leaving their 95% market share untouched. Who had Apple down on their betting sheet as the biggest loser from a Google anti-trust lawsuit?

ffggvv 6y ago
apple actually did use bing for siri search results up until 2017 when google started bribing them
matwood 6y ago
Sort of. Google is paying Apple to not doing something else. When 8-12B is gone, Apple loses the incentive to not make something like DDG the default or build or buy their own search engine.
- tptacek 6y ago
  The fact that DDG is grossly inferior to Google is a pretty strong incentive.
  - gogopuppygogo 6y ago
    Have you used it lately? It’s on par or better for 99% of what I use it for (tech, real estate, and advocacy).
    - tptacek 6y ago
      I have. Also, I just checked my browser history of searches against DDG. I stand by what I said. What they're doing is impressive, but that's not the same thing as saying that they're on the same level of result quality as Google.
    - kevin_thibedeau 6y ago
      I have to use !g a lot because of inferior results from the default search. It can be tough to even get a relevant wikipedia entry to show up in the top 5.

phkahler 6y ago

Pay to play was made illegal in radio, why is it OK here?

gogopuppygogo 6y ago
Radio spectrum is owned by the public and licensed. iPhone is private.
javajosh 6y ago
Well now, that is an interesting question! I don't know much about the historical use of "payola" that record labels would pay DJs to play their songs. It's interesting that the libertarians would say "So what?" Most of us though would recognize the conflict-of-interest, just like we require people to at least tell us that certain speech is paid. Maybe that's the comprimise that would work here - Apple would keep Google as the default, but add a clear notice that they'd been paid, and how much. "Keep default search? Google paid us 12B USD for this value, are you sure?" Maybe it will get people questioning why the Goog wants search traffic so badly. And ad traffic. And DNS traffic. And video consumption traffic. And...
deleted 6y ago
[deleted]

ChuckMcM 6y ago

And I suspect this is why Apple doesn't implement its own search index / service. If I were at Apple and I had payments like this coming in, I would absolutely take $1B/year off to fund building a search engine. This because Google can 'turn off' this at any moment, so having that be a non-threat would be useful. Further there is a tremendous amount of value in crawling the web in terms of data set generation. And finally it really would allow them to build knowledge bases that would enable Siri to be more effective as a verbal assistant. But while the cash is pouring in like that? Well just ride that fountain of cash for as long as you can.

dheera 6y ago
> 'turn off' this at any moment You could always switch to Bing, which isn't really that bad as a Google replacement. In all seriousness though why would Google want to ever turn itself off for Apple devices? That would backfire horribly.
- yeetman21 6y ago
  Bing is owned by microsoft
  - dheera 6y ago
    Sure, but Microsoft would probably be more than happy to scoop up any market holes left behind by Google. Google decided to ditch China by not cooperating with the government. Bing decided to cooperate and is happily unblocked there.
- ChuckMcM 6y ago
  The way I think about it, Google's interests aren't aligned with Apple's interests. Think about the money that Apple has invested in their own bespoke ARM chips. They could have stuck with Broadcom or Samsung chips for the iPhone but they didn't. They wanted things that they couldn't get access to through a supplier, and a competitive advantage. If I were an executive at Apple I would look at the risk every supplier contributed to overall profitability and margins. And I would look to see how much value I could capture for Apple vs paying it out to third parties. So for me the question is about "How much of the user experience can I ensure will meet my standards?" and having your own search engine would help there. There are other values as well when you can make large scale semantic queries against the entire web. And it can be extremely lucrative to tie the "search experience" as a feeder into your other products (which is part of what the Justice department doesn't like about Google)

dang 6y ago

Url changed from https://twitter.com/kashhill/status/1320387328817451009 https://twitter.com/kashhill/status/1320387328817451009, which points to this.

jeffbee 6y ago

I assume the "you are the product" parrot army will roll into these comments in a moment. Apple sells iOS users' attention for ten billion dollars a year. Clearly, you are the product.

corobo 6y ago
Looks like you're leading the charge solo chief
- jeffbee 6y ago
  Right? It's almost like there are two standards.

mensetmanusman 6y ago

Based on how poorly Siri searches, I do hope Apple has been putting some billions towards making a reasonable search engine once google is gone.

immy 6y ago
https://appleinsider.com/articles/20/08/27/apple-may-launch-its-own-web-based-search-engine https://appleinsider.com/articles/20/08/27/apple-may-launch-...

neonate 6y ago

https://archive.is/UkSW4 https://archive.is/UkSW4

jtsiskin 6y ago

“Apple and Google’s parent company, Alphabet, worth more than $3 trillion combined, do compete on plenty of fronts, like smartphones, digital maps and laptops.” This line makes it sound like Apple and Google have the same parent company. Should it read “Apple, and Google’s...”

dragonwriter 6y ago
What is written is correct, and your additional punctuation doesn't improve it, but it uses poorly chosen wording. It would be better to just use the simple names as the main items in the list, and say “Apple and Alphabet, Google’s parent company, [...]”

supernova87a 6y ago

I think, as with all anti-trust/anti-competitive questions, if you define the scope wrong then of course the entity claiming unfair practices can be positioned to win. "A deal that controls the internet" is really a pretty sweeping claim! Is the question whether this deal prevents companies from developing and selling their search solution? If so, then is Google paying Apple, who has what, 40% market share of mobile phones, really able to stifle the development of search engines? With search on mobile phones being a further x% fraction of all (general, browser-opening) search being done on the internet? I.e. when placed with desktop, tablet, browser window search as well. If we're down to perhaps low double digit % of all search, how it that unfairly preventing competition? And yes, if you then go to the opposite extreme and say that the market is search on Safari on iPhones, then the market is cornered and controlled by Google. But is that reasonable to define as the market in question? Where you're entitled to not have anti-competitive behavior? That's Peter Thiel's example of having cornered the market for British food in downtown Palo Alto and prevented competitors from moving into your rented space. It may be a sweetheart deal for Apple, and Google making sure that it gets preferred treatment in this one corner of the internet, but it seems to me hard to claim that this has stifled competition for the development of search engines in general?

jbay808 6y ago
> If so, then is Google paying Apple, who has what, 40% market share of mobile phones, really able to stifle the development of search engines? Isn't the other 60% basically just (Google's) Android? And I think these days, search engines aren't just developed by someone coding up a clever algorithm in their garage; they improve based on data from being used a lot. So yes, it would be an obstacle to competitors.
- supernova87a 6y ago
  Then why didn't they go after that instead? That's even more blatant if so. > And I think these days, search engines aren't just developed by someone coding up a clever algorithm in their garage; they improve based on data from being used a lot. So yes, it would be an obstacle to competitors. Wait, now we need to make sure others can develop a good search engine? That's what fairness in competition is? That's a whole new level of argument. I cannot imagine a court wanting to step into that territory.

zenexer 6y ago

I know I’m nitpicking, but this just doesn’t add up: > Nearly half of Google’s search traffic now comes from Apple devices, according to the Justice Department > The Justice Department, which is asking for a court injunction preventing Google from entering into deals like the one it made with Apple, argues that the arrangement has unfairly helped make Google, which handles 92 percent of the world’s internet searches, the center of consumers’ online lives. What? Worldwide, iOS market share is peanuts compared to Android. Depending on the report, the exact amount varies pretty widely, but nothing ever seems to report more than 18-ish percent worldwide. macOS is negligible. Meanwhile, Android’s market share is enormous. Android devices alone—worldwide—could easily account for half of Google’s search traffic, especially when you consider countries like India. But the DOJ wants to argue that: 1. Google handles 92% of global search traffic 2. Half of Google’s traffic comes from Apple devices If we believe that 92% figure, that places a generous upper limit of Google’s search traffic originating from Apple devices at about 20%, far short of “nearly half.” Look, I hate the monopolistic nature of search just as much as the next person, but can we please double-check that our numbers actually make sense?

1over137 6y ago
Maybe the USDOJ cares more about US numbers, not worldwide ones? iOS is surely more than 18% in the USA.
- fmajid 6y ago
  They do, and also it makes a better case than worldwide where Google is kneecapped by the Chinese government to benefit Bandung, or Russia where Yandex is a strong competitor.
ocdtrekkie 6y ago
Pretty sure the "over half" figure refers to traffic in the US, where iOS is around half of mobile devices, unlike the global market where Android has a definite monopoly outside the US. The DOJ legislates largely based on US figures, but noting Google's global power is hard to ignore completely.

mgreg 6y ago

It is an interesting exercise to look at the barriers to entry for search engines. Clearly there are technology challenges (internet scale web crawler, indexer, search interface, ad technology) but these are not novel challenges anymore. Funding is an issue as operating a general search index is likely very expensive with high upfront investment. Marginal costs are nearly zero as the major expense is likely fixed (crawling and indexing the internet) while variable costs are a small percentage (serving search results for each request). Google, like Nike, Gucci, and Procter & Gamble, has spent billions to build their brand perception and cement the habit of using their products despite there often being minimal actual differences between competitive products. But the critical one really does seem to be attracting new users. The history of DDG, ClickZ, Bing all seem to validate this. Just getting a user to _try_ a new search engine is very difficult despite it being "one click away." Certainly a deal with a browser maker / mobile manufacturer would aid this but it's priced amazingly out of the reach of competitors denying perhaps the most obvious way to get trials and traffic. Google clearly knows this. How can it be true that switching is so easy ("just a click away") as to suggest that being the default is meaningless, and yet pay >$8 billion a year to be that default.

post_below 6y ago
You're missing the most novel technology: ranking. Without that everything else is pretty much useless (which is why DDG primarily republishes Bing results). You're right that drawing users is a big challenge, but privacy gives you a way in there (again DDG). It just isn't enough if you can't provide better results. Google works hard to maintain their dominance on a lot of fronts, some questionable and in need of regulation, but the biggest reason for their position is, as it always was, ranking algos. Which is extremely expensive in engineering time because ranking isn't static but rather a constant war with gaming.
- mgreg 6y ago
  Thanks for pointing out ranking search results as a technology investment required; I tend to think of it as part of indexing but a good call out. I purposely didn't want to go down the "quality" rat hole because that tends to devolve into subjective opinions (see DDG threads throughout HN). My personal, subjective opinion is that blind tests would likely reveal very little differences and thus justify their major investment in brand advertising made by Google. (not blind but compare https://duckduckgo.com/?q=best+wallpaper https://duckduckgo.com/?q=best+wallpaper with https://www.google.com/search?q=best+wallpaper; https://www.google.com/search?q=best+wallpaper; do you really want 3 pinterest results to this query; this is the burden of being the dominant search engine - you're the one people will game) --edited for typos

om2 6y ago

The biggest source of Google search traffic is doubtless Chrome, and Google doesn’t have to make a deal for that.

Lammy 6y ago

> “We have this sort of strange term in Silicon Valley: co-opetition,” said Bruce Sewell, Apple’s general counsel from 2009 to 2017. The word "cartel" already exists.

PrinceKropotkin 6y ago

I'm all for anti-trust action, and especially legislation, against Google and other large corporations with app stores and ads and other things perverting otherwise decent product interactions. But this just seems like a terrible way to frame the nature of Google's anti-consumer behavior.

cryptica 6y ago

What bothers me the most is that of all the anti-competitive activities which Apple and Google engage in, this is the one which is given the most attention in the media. It's a bit of a stretch to claim that DuckDuckGo is 'the little guy'. Yes, DuckDuckGo is small relative to Google, but it's still an insanely successful company. Imagine what Google is doing to millions of small businesses by slightly tweaking its algorithm every few months... That's the real damage. These are the real casualties. We're taking the focus away from millions of casualties who experience real suffering and directing it towards a single company which is doing well anyway. The pain of the actual 'little guy' is 100x what the CEO of DuckDuckGo feels. It's total and absolute hopelessness.

Google234 6y ago
When Google tweaks its algorithms, some other business will win if another suffers. I would imagine changes are done for a reason, e.g. site A has better reviews than site B.
- cryptica 6y ago
  Exactly. What kinds of businesses tend to win? Businesses which benefit Google and Google insiders. That means big corporations which Google has long term advertising deals with, VC-backed startups which Google plans to acquire at a discount and other businesses which have a connection to Google insiders (startup of the project manager's friend, ...). I'm not suggesting that they tweak the algorithm to benefit specific websites (they probably don't), but they tweak it to favor certain characteristics which, on the whole, benefit Google and Google insiders. Don't forget that Google employees are not a representative sample of the population by any measure. What kinds of businesses tend to lose? Businesses that are not affiliated with Google or Google insiders. Independent projects. The reason why people at Google don't acknowledge that this is happening is because the harm is literally being inflicted on those businesses which are in Google's blind spots so they don't even see the problems... Except on rare occasions when they are shocked to realize that 50% of the population voted for Trump.

strangeattractr 6y ago

Only on here could people say that the engineering challenges Google faces in delivering search are 'solved problems' that could be easily mimicked. I get that people don't like the surveillance tech business model, I don't really like it myself. But we can't just pretend that the personal data that they gather to serve you ads more effectively isn't also the reason their search results, at least in my experience, are better than their competitors'.

manquer 6y ago
It not a solved for you and me. It is a solved problem for big tech , apple already has one with siri suggested site. Just like maps. Apple one day decided google maps is no longer thr default and implemented their own. Sure they had bad early years and hilarious issues, however they are on par or comparable to google maps today.
tsjq 6y ago
You referring to the "filter bubble" thing?

ncmncm 6y ago

That the numbers don't seem to add up probably means you are misinterpreting them. Apple has half the phone business by revenue, not by number of phones, never mind by value delivered. But to advertisers, that is the number that matters. Apple customers are extra-valuable to pitch to, because they have already demonstrated that (1) price doesn't matter to them (or they would have a different phone), (2) they are easily satisfied (or they would have a different phone), (3) they are readily manipulated (or they...), and (4) they are especially status-conscious (...). All those qualities make them what business schools like to call "cash cows" (yes, really) that can be milked indefinitely. Apple is renting them out to Google at a high rate. Google knows that practically all iphone users would never change the search engine on their own initiative, because iphone users have been very carefully trained, over the years, to take exactly what Apple dishes out and learn to like it. Apple knows that renting out their customers doesn't cost Apple direct income, because they have already spent on everything Apple has. Knowing that somebody is an Apple user, you can offer them top-drawer prices and they will pay, provided a high-status logo is attached, and feel smug about having paid it. They are buying "price-signaling" mojo, so they don't demand commensurate value, and are cheap to cater to.

discordance 6y ago
> (1) price doesn't matter to them (or they would have a different phone) I’m an iPhone user and price matters to me. Status means little to me. Privacy is my priority and number one reason I use an iPhone. Apple is not an advertising company, and doesn’t make a buck selling my data. FYI my mobile search default is DDG.
- lotsofpulp 6y ago
  It’s amazing that people carry on with the trope even after Apple brings out a $400 iPhone. Not to mention iPhones have received software updates for far longer than anyone else for over a decade and they clearly have the lowest amortized costs.
- deleted 6y ago
  [deleted]
- 6y ago

known 6y ago

US "companies" are colonizing countries https://en.wikipedia.org/wiki/List_of_public_corporations_by_market_capitalization https://en.wikipedia.org/wiki/List_of_public_corporations_by... Prior to that UK attacked/colonized 9 out of 10 countries https://www.telegraph.co.uk/history/9653497/British-have-invaded-nine-out-of-ten-countries-so-look-out-Luxembourg.html https://www.telegraph.co.uk/history/9653497/British-have-inv...

Sarbashish 6y ago

This is huge news.