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> Google also pays Apple 7 billion annually^ to be its default SE. It's actually between $8-12 billion now. [1] > Yahoo & MSFT's experience as 2nd place in th

> Google also pays Apple 7 billion annually^ to be its default SE. It's actually between $8-12 billion now. [1] > Yahoo & MSFT's experience as 2nd place in that market was working very hard and earning $0 profits. This is an exaggeration though. MSFT made nearly $8 billion in revenue last year from search (mostly Bing), and the business has naturally high margins so it would be extremely surprising if it was unprofitable on an operating basis. [2] The reality is that search is so huge that it's worth competing in, even if the incumbent has 30X your market share. [1] https://twitter.com/jowens510/status/1428416856038072321 https://twitter.com/jowens510/status/1428416856038072321 [2] https://backlinko.com/bing-users https://backlinko.com/bing-users

dalbasal 5y ago
>>business' has naturally high margins $8bn in revenue might not mean profitable. Google certainly spend a lot more than this on search and advertising, and well... software scales. In any case, whether they make $1bn in profit, losses or something in between... This is <1% of market profits. Apple is making $8bn-$12bn, all profit, just on defaults.
- arcturus17 5y ago
  GP is saying naturally high margins because it is a pure software play with close-to-zero marginal distribution cost and massive scale. We don’t know if Bing’s profitable but GP is merely saying that with the circumstances above it is an interesting market for Microsoft to pursue.
  - dalbasal 5y ago
    Perhaps, but I think it's marginal in practice. Whether MSFT makes an internally accounted 10% margin or 10% loss on their $8bn in revenue, Apple collect >$8bn which is entirely profit. Cooperating and accepting a slice of Google's monopoly profits is far more profitable that competing would be, in all but the most bullish scenarios. IE, MSFT would need to be outright challenging Google's 1st place position in search marketing to have a hope of earning more than Apple do by doing nothing, spending nothing, investing nothing and taking no risks. Also, what would it take for MSFT to compete with Google in earnest? For one thing, Microsoft would need to outbid Google for such deals. They'd need to pay Apple, Telcos, and such more than Google do now.
    - sokoloff 5y ago
      > by [Apple] doing nothing, spending nothing, investing nothing and taking no risks. Apple did none of those things with respect to launching a search engine. Apple did all of those things with respect to building an audience of daily engaged (often affluent) users. That’s the investment Apple made to earn the position to cash Google’s check.
bushbaba 5y ago
It’s likely the payoff is also to prevent apple from building its own search engine to compete. As googles payoff is so lucrative
- dehrmann 5y ago
  Maybe, but Google Maps seems to do fine on iPhone. Google and Apple might have their own numbers on this that disagree, though.
  - deleted 5y ago
    [deleted]
  - simfree 5y ago
    Google Maps has a better data collection method (bugging their userbase to collect data for them, encouraging users to collect even more as Google Scouts) and also the dataset of Waze, while Apple has a much more laborious process where an Apple Contractor (initially in Austin or Cupertino) modifies points of interest, business hours, road alignments, etc manually. Apple started to ship this operation over to India 5ish years ago, and their contractors over there produce much worse results as they are not hiring professional geographers with degrees like they did stateside.
    - toastal 5y ago
      I wish more people would realize they are literally working for Google without getting paid to do this work. If it's out of a greater sense of helping people and contributions, OpenStreetMap needs to be better known.
      - Andrew_nenakhov 5y ago
        Russian tech giant Yandex (they mostly do everything that Google does: search, maps, email, etc) has a so-called "People's map", filled by volunteers who transfer rights for their edits to Yandex for free the use in their closed commercial project. I always wondered why these volunteers don't work on OpenStreetMap instead.
chrjxnandns 5y ago
It’s insane that Google spends more than Bing’s entire yearly revenue in order to buy a default spot and keep their competitors out of it.
- Applejinx 5y ago
  Not really. It's a scale issue. Such an expenditure to Google is like a billionaire dropping ten thousand dollars on something, compared to a normal human asked to come up with ten thousand dollars. Buying a default spot is the interesting aspect here. Google spending more than Bing's entire yearly revenue just means they want that thing, and tells you their relative wealth. I figure this applies just as well to corporations as it does to individuals: if you're going to look askance at Jeff Bezos etc. you may as well keep an eye on businesses with similar disparities of scale relative to their market sector. Not like we haven't seen all this before.
  - chrjxnandns 5y ago
    Considering Bing is their closest competitor and G are spending more B can make in revenue to exclude them from a market seems like a text book definition of monopoly abuse.

dalbasal 5y ago

>>business' has naturally high margins $8bn in revenue might not mean profitable. Google certainly spend a lot more than this on search and advertising, and well... software scales. In any case, whether they make $1bn in profit, losses or something in between... This is <1% of market profits. Apple is making $8bn-$12bn, all profit, just on defaults.

arcturus17 5y ago
GP is saying naturally high margins because it is a pure software play with close-to-zero marginal distribution cost and massive scale. We don’t know if Bing’s profitable but GP is merely saying that with the circumstances above it is an interesting market for Microsoft to pursue.
- dalbasal 5y ago
  Perhaps, but I think it's marginal in practice. Whether MSFT makes an internally accounted 10% margin or 10% loss on their $8bn in revenue, Apple collect >$8bn which is entirely profit. Cooperating and accepting a slice of Google's monopoly profits is far more profitable that competing would be, in all but the most bullish scenarios. IE, MSFT would need to be outright challenging Google's 1st place position in search marketing to have a hope of earning more than Apple do by doing nothing, spending nothing, investing nothing and taking no risks. Also, what would it take for MSFT to compete with Google in earnest? For one thing, Microsoft would need to outbid Google for such deals. They'd need to pay Apple, Telcos, and such more than Google do now.
  - sokoloff 5y ago
    > by [Apple] doing nothing, spending nothing, investing nothing and taking no risks. Apple did none of those things with respect to launching a search engine. Apple did all of those things with respect to building an audience of daily engaged (often affluent) users. That’s the investment Apple made to earn the position to cash Google’s check.

bushbaba 5y ago

It’s likely the payoff is also to prevent apple from building its own search engine to compete. As googles payoff is so lucrative

dehrmann 5y ago
Maybe, but Google Maps seems to do fine on iPhone. Google and Apple might have their own numbers on this that disagree, though.
- deleted 5y ago
  [deleted]
- simfree 5y ago
  Google Maps has a better data collection method (bugging their userbase to collect data for them, encouraging users to collect even more as Google Scouts) and also the dataset of Waze, while Apple has a much more laborious process where an Apple Contractor (initially in Austin or Cupertino) modifies points of interest, business hours, road alignments, etc manually. Apple started to ship this operation over to India 5ish years ago, and their contractors over there produce much worse results as they are not hiring professional geographers with degrees like they did stateside.
  - toastal 5y ago
    I wish more people would realize they are literally working for Google without getting paid to do this work. If it's out of a greater sense of helping people and contributions, OpenStreetMap needs to be better known.
    - Andrew_nenakhov 5y ago
      Russian tech giant Yandex (they mostly do everything that Google does: search, maps, email, etc) has a so-called "People's map", filled by volunteers who transfer rights for their edits to Yandex for free the use in their closed commercial project. I always wondered why these volunteers don't work on OpenStreetMap instead.

chrjxnandns 5y ago

It’s insane that Google spends more than Bing’s entire yearly revenue in order to buy a default spot and keep their competitors out of it.

Applejinx 5y ago
Not really. It's a scale issue. Such an expenditure to Google is like a billionaire dropping ten thousand dollars on something, compared to a normal human asked to come up with ten thousand dollars. Buying a default spot is the interesting aspect here. Google spending more than Bing's entire yearly revenue just means they want that thing, and tells you their relative wealth. I figure this applies just as well to corporations as it does to individuals: if you're going to look askance at Jeff Bezos etc. you may as well keep an eye on businesses with similar disparities of scale relative to their market sector. Not like we haven't seen all this before.
- chrjxnandns 5y ago
  Considering Bing is their closest competitor and G are spending more B can make in revenue to exclude them from a market seems like a text book definition of monopoly abuse.