7 ms·

For those unaware of history, Google's "ad revenue share" deal with Apple is similar to the early "distribution deal" that ~2002 Google struck with America Onli

by jasode 3y ago

For those unaware of history, Google's "ad revenue share" deal with Apple is similar to the early "distribution deal" that ~2002 Google struck with America Online. The basic financial enticement is the same: use our search engine and we'll give you a cut of the ad revenue. I've not yet seen a legal explanation of why the Apple ad revenue share deal is now "illegal" and yet the AOL deal wasn't. Somewhat similar deals also happen with tv networks where they sign exclusive "distribution deals" with sports leagues and they share the money they get from tv commercials (the ads). "Put your NFL Monday game or college basketball tournament on our tv network and you get some of our ad revenue." I guess the difference now is that Google is really big. Ok. But is that really the only reason?

lvzw 3y ago
Exclusive deals can present antitrust issues, but the kicker is that this isn't even an exclusive deal, it's a default deal! Users can still can still use other search engines on iOS devices.
- 2OEH8eoCRo0 3y ago
  Defaults matter. Google's internal communication indicates that they know this. Microsoft testified that defaults matter and that unless they (or anyone else) could put up more money than Google then they had no shot. You could innovate and make a better product and it doesn't matter because you can't outbid Google.
  - ion1c 3y ago
    In Europe Androids have had user decided default browser/search engine selection in the out of box set up for years. Google still wins massively because users know it is simply a superior product.
    - 2OEH8eoCRo0 3y ago
      Part of the antitrust issue is that Apple never developed their own search engine because of these payments. Google paid Apple to not compete. I doubt that the same number of people willingly choose Google, otherwise they wouldn't be paying so much money to be the default. That's a lot of money to throw away.
      - amadeuspagel 3y ago
        There would be no choice without that deal either, Apple would simply sell its users to the next highest bidder.
        matthewdgreen 3y ago
        Or Apple would develop a search engine instead, which is exactly what they did with Maps.
      - creato 3y ago
        How is this different from any typical outsourcing arrangement other than the size? Outsourcing arrangements many different motivations, it’s not just money. Otherwise, basically any outsourcing arrangement can be said to be “throwing away money” for one party.
        deleted 3y ago
        [deleted]
      - deleted 3y ago
        [deleted]
    - aaomidi 3y ago
      Right, which is also arguably why we’ve seen competition from other search engines.
  - ankit219 3y ago
    It's a widespread assumption that defaults matter. But to what degree? I came across it first when I saw Dan Ariely's talk and his work on defaults (may not be the proponent)[1] but my takeaway is that it matters when you don't care about the as much. For everyone with Windows, you start off with Edge/IE and then Bing as a default search engine. Yet, most switch to Chrome + Google almost instantly. People care about their browsing experience more than we give them credit for. Remember in 2009-10 when Chrome was new, it managed to win market share cos of superior product when it was not the default on Windows/Linux/MacOSX. On mobile too, the behavior is likely going to be there to a certain degree. While Google pays Apple a massive fee, there was an admission earlier in the trial that both Mozilla and Apple would still go ahead w Google (even without the deals) because of superior UX. Not sure if both said it, but one of them certainly did. [1] https://danariely.com/the-power-of-defaults-in-how-we-eat/ https://danariely.com/the-power-of-defaults-in-how-we-eat/
    - dmvdoug 3y ago
      Maybe look at some of the trial exhibits that have been posted on the DOJ website. Google sure as hell thinks defaults matter a lot. And intent matters at trial.
      - ankit219 3y ago
        From the trial itself, Google has argued and questioned the expert witness from DOJ if defaults really matter. Whole Microsoft question was raised by them too. Exhibits are good with context, but without supplementing the context they are misleading. Hard to argue for something DOJ did not think would make their case stronger and did not refer to in the trial.
- layer8 3y ago
  Microsoft lost cases against the EU because they made Internet Explorer and Windows Media Player the default on Windows: https://en.wikipedia.org/wiki/Microsoft_Corp._v._Commission https://en.wikipedia.org/wiki/Microsoft_Corp._v._Commission
  - Clubber 3y ago
    I believe it's because they were using their monopoly power to give that software away for free, while their competitors couldn't and ended up selling or going out of business. The DOJ should really be looking at things like YouTube, which doesn't make any profit (I don't believe) but since Google proper supports it, no one can compete with it. That might be why Google is pushing so hard against ad blockers, they need to make YouTube profitable to avoid prosecution.
    - andrewinardeer 3y ago
      Or you know, revenue growth to serve the only stakeholders that means anything to them - their shareholders.
      - Clubber 3y ago
        Google bought YouTube in 2006. Coincidence they care about YouTube ad revenue so much all of a sudden? I guess they were getting around to it eventually.
    - Aerbil313 3y ago
      How come YouTube doesn't turn a revenue? Is it even possible, it uses so much bandwidth? Any sources?
    - saagarjha 3y ago
      YouTube makes a profit. Or it did at least, not sure what’s going on with the adblocker stuff.
- brainbag 3y ago
  You can change the default of Safari, but not for Siri. "Search the Internet" voice command always uses Google. I'm personally hoping that either part of this lawsuit or part of their Siri upgrade allows us to change it.
  - tantalor 3y ago
    Does Siri show ads?
- davidodio 3y ago
  using Kagi is pretty clumsy. We iOS users get to pick from a pretty limited list. In reality we should be able to set search to any endpiont that handles the ‘q’ param
meiraleal 3y ago
> I guess the difference now is that Google is really big. Ok. But is that really the only reason? So as you are insinuating things why not be clear and name it? What is it, corruption? Or do you think that the fact that AOL deal wasn't considered illegal, no deal ever will be and Apple/Google are free to do as they please? Your idea of justice is quite weird.
- jessicas_rabbit 3y ago
  I believe OP was genuinely interested in identifying rationale for this discrepancy in legal precedent, regardless of any personal stance they hold on the justice of this business deal.
  - mrgoldenbrown 3y ago
    OP didn't describe any particular legal precedent though, so we don't know why OP thinks the AOL deal was legal. There's a big difference between "nobody cared enough to sue or prosecute X behavior" and "X behavior has been tested in court and was ruled legal".
- dang 3y ago
  Can you please not post in the flamewar style? It's quite against the site guidelines: https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html. You can make your substantive points without that, so if you'd please do so instead, we'd be grateful.
burkaman 3y ago
I don't know the answer to your question, but the fact that the Google-AOL deal was never challenged doesn't mean it was legal. Plenty of illegal things are never challenged.
- SllX 3y ago
  Generally something is legal until there’s a law saying it isn’t. That’s kind of how it just works in America, and it not just here either. When that Google-AOl deal Google wasn’t even close to as popular as it is now. It was a simple distribution deal. People are tunneled in on the iPhone because that’s Apple’s juggernaut now but this deal with Apple also goes back to like 2002 when I was still convincing people to switch off Yahoo and MSN to Google. They also made a similar deal with Mozilla which is still basically how Mozilla is still able to operate at all. I mean 2002 Yahoo probably could have outspent 2002 Google. 2002 Microsoft definitely could have and it’s not like MSN was a juggernaut, but they were complacent. I’ll just say it: Google wanted it more. Search and Advertising was basically all they were at the time, no Gmail, no Google Maps, no YouTube or any of that other stuff we associate with them now, and they went out and took the opportunities they could. They developed a toolbar for IE users, setup distribution deals for the toolbar, put it in the Firefox directory, and sought out new avenues of information to index like when they acquired Deja News and Blogger, and subsequently launched Froogle, Google Blog Search, Google News, Alerts, Images, Patents, GOOG-411, etc. Even acquiring and developing Android was a play that ensured even if their relationships went south and Microsoft came to dominate Mobile in a way that was beginning to look a lot more possible in 2006 (and not so much in 2011) they would never be entirely locked out of Mobile if that ever became a thing (which uh, spoiler alert, it did). And when did Google really start to look like the juggernaut in the room? Well in Jan 2005 they had 35.1% of the search market to Yahoo’s 31.8% and a year later Google was at 41.4% to Yahoo’s 28.7%.[1] So probably you could say sometime about 2004 around when they IPO’d, maybe, is the soonest you could say they were really a juggernaut. That’s dominance but that sure isn’t anything close to a monopoly, and they were just outcompeting in both quality and distribution and in their search and ad product offerings. Acquiring DoubleClick even after Microsoft bid up the price was also a pretty good hat trick that was like a rocket booster for their ad business, putting Microsoft in a position where they had to spend almost twice as much for aQuantive only to write it down 5 years later. This is why antitrust law is so scuffed. The DOJ just ends up re-litigating old contracts and continuations of them hoping that in the current political climate they can find an angle for the headshot in front of a friendly judge. They’re going to lose hard while playing up whatever small victories they can get along the way while wasting a lot of money in court and then the administration is going to change again which might continue any cases in progress but is still going to have its political priorities shift. [1]: https://www.zdnet.com/article/search-engine-market-shares-in-jan-2006-google-41-4-yahoo-28-7-msn-13-7/ https://www.zdnet.com/article/search-engine-market-shares-in...
halJordan 3y ago
It's not illegal to have these deals; it's not illegal to have a monopoly. It's illegal to use your monopoly to prevent others from successfully competing. And again- no one has made the determination that it is illegal. The DOJ believes it's illegal, but the DOJ doesn't decide what's illegal. We're literally having the trial to figure it out. So, you're relying on overly simplistic assumptions that are misleading you. You can easily get the legal arguments, they're on Wikipedia, they're on the doj website, they're on the indictments. The information just needs you to go out and get it.
- dmvdoug 3y ago
  > The information just needs you to go out and get it. I am definitely going to use that. And since I teach ninth graders, I predict I will be using that on a daily basis. Blessings upon you. (And the curses of ~175 9th graders every year.)
  - hashtag-til 3y ago
    These 9th graders are luck to have you! The skill of taking initiative and finding the drive to look for information is a very powerful one.
- sonicanatidae 3y ago
  Can anyone, anywhere demonstrate a public corporation that has a monopoly and hasn't abused it to keep competitors out? Bueller?...Bueller....
ksec 3y ago
>Ok. But is that really the only reason? Sentiment shift. Moral Compass in Silicon Valley ( or more like in the Tech Sector ), Smartphone Revolution and 15 years of zero interest rate. None of the reported are really "news" apart from the precise 36% figure which is higher than most of our initial estimate. "Customer acquisition cost" isn't new. On a similar note Google also share their Ad revenue with Mozilla / Firefox. We might not like a lot of what's going on with Google or Apple. But I dont think revenue share is in anyway wrong or illegal.
- shiroiuma 3y ago
  I think there should be prosecution of Apple based on this, not Google. Because of this huge cut, Apple won't allow other browsers on their platforms, which is anti-competitive.
  - kergonath 3y ago
    > Because of this huge cut, Apple won't allow other browsers on their platforms, which is anti-competitive. That’s not the case, though. What some people complain about is the fact that other browsers must use the WebKit engine, but there is nothing stopping people from putting browsers in the App Store. This is not relevant to this deal. The engine does not matter at all, what matters is the user base.
    - freedomben 3y ago
      The engine absolutely matters! If you want to use a feature that is available in Chrome and Firefox, but not in webkit/safari, you are completely out of luck on iOS. Apple has been holding back web development for many years with this policy. I suspect it is to keep PWAs from being competitive with native apps, but whatever the motivation, that is very much the effect.
- kergonath 3y ago
  > But I dont think revenue share is in anyway wrong or illegal. It’s a thin line between revenue sharing, which is fine, and anticompetitive bribes to entrench your dominant position and extinguish competition, which is not. I am not saying that it’s the second case, but that’s what the DoJ wants to prove.
jedberg 3y ago
> I've not yet seen a legal explanation of why the Apple ad revenue share deal is now "illegal" and yet the AOL deal wasn't. Do you ever speed on the highway? Have you gotten a ticket for every time you did it? Just because you didn't get caught doesn't mean it's legal.
1vuio0pswjnm7 3y ago
"Somewhat similar deals also happen with tv networks where they sign exclusive "distribution deals" with sports leagues and they share the money they get from tv commercials (the ads)." Except the networks pay the leagues to broadcast games. With so-called "tech" companies, this is reversed. Google is paying Apple and Samsung so that no other search engine gets to be the pre-installed default. Sports leagues do not pay TV networks in order to prevent other leagues from doing deals with the networks. But Google pays hardware manufacturers to be the pre-instaled default and exclude other search engines.

by jasode 3y ago

lvzw 3y ago

Exclusive deals can present antitrust issues, but the kicker is that this isn't even an exclusive deal, it's a default deal! Users can still can still use other search engines on iOS devices.

2OEH8eoCRo0 3y ago
Defaults matter. Google's internal communication indicates that they know this. Microsoft testified that defaults matter and that unless they (or anyone else) could put up more money than Google then they had no shot. You could innovate and make a better product and it doesn't matter because you can't outbid Google.
- ion1c 3y ago
  In Europe Androids have had user decided default browser/search engine selection in the out of box set up for years. Google still wins massively because users know it is simply a superior product.
  - 2OEH8eoCRo0 3y ago
    Part of the antitrust issue is that Apple never developed their own search engine because of these payments. Google paid Apple to not compete. I doubt that the same number of people willingly choose Google, otherwise they wouldn't be paying so much money to be the default. That's a lot of money to throw away.
    - amadeuspagel 3y ago
      There would be no choice without that deal either, Apple would simply sell its users to the next highest bidder.
      - matthewdgreen 3y ago
        Or Apple would develop a search engine instead, which is exactly what they did with Maps.
    - creato 3y ago
      How is this different from any typical outsourcing arrangement other than the size? Outsourcing arrangements many different motivations, it’s not just money. Otherwise, basically any outsourcing arrangement can be said to be “throwing away money” for one party.
      - deleted 3y ago
        [deleted]
    - deleted 3y ago
      [deleted]
  - aaomidi 3y ago
    Right, which is also arguably why we’ve seen competition from other search engines.
- ankit219 3y ago
  It's a widespread assumption that defaults matter. But to what degree? I came across it first when I saw Dan Ariely's talk and his work on defaults (may not be the proponent)[1] but my takeaway is that it matters when you don't care about the as much. For everyone with Windows, you start off with Edge/IE and then Bing as a default search engine. Yet, most switch to Chrome + Google almost instantly. People care about their browsing experience more than we give them credit for. Remember in 2009-10 when Chrome was new, it managed to win market share cos of superior product when it was not the default on Windows/Linux/MacOSX. On mobile too, the behavior is likely going to be there to a certain degree. While Google pays Apple a massive fee, there was an admission earlier in the trial that both Mozilla and Apple would still go ahead w Google (even without the deals) because of superior UX. Not sure if both said it, but one of them certainly did. [1] https://danariely.com/the-power-of-defaults-in-how-we-eat/ https://danariely.com/the-power-of-defaults-in-how-we-eat/
  - dmvdoug 3y ago
    Maybe look at some of the trial exhibits that have been posted on the DOJ website. Google sure as hell thinks defaults matter a lot. And intent matters at trial.
    - ankit219 3y ago
      From the trial itself, Google has argued and questioned the expert witness from DOJ if defaults really matter. Whole Microsoft question was raised by them too. Exhibits are good with context, but without supplementing the context they are misleading. Hard to argue for something DOJ did not think would make their case stronger and did not refer to in the trial.
layer8 3y ago
Microsoft lost cases against the EU because they made Internet Explorer and Windows Media Player the default on Windows: https://en.wikipedia.org/wiki/Microsoft_Corp._v._Commission https://en.wikipedia.org/wiki/Microsoft_Corp._v._Commission
- Clubber 3y ago
  I believe it's because they were using their monopoly power to give that software away for free, while their competitors couldn't and ended up selling or going out of business. The DOJ should really be looking at things like YouTube, which doesn't make any profit (I don't believe) but since Google proper supports it, no one can compete with it. That might be why Google is pushing so hard against ad blockers, they need to make YouTube profitable to avoid prosecution.
  - andrewinardeer 3y ago
    Or you know, revenue growth to serve the only stakeholders that means anything to them - their shareholders.
    - Clubber 3y ago
      Google bought YouTube in 2006. Coincidence they care about YouTube ad revenue so much all of a sudden? I guess they were getting around to it eventually.
  - Aerbil313 3y ago
    How come YouTube doesn't turn a revenue? Is it even possible, it uses so much bandwidth? Any sources?
  - saagarjha 3y ago
    YouTube makes a profit. Or it did at least, not sure what’s going on with the adblocker stuff.
brainbag 3y ago
You can change the default of Safari, but not for Siri. "Search the Internet" voice command always uses Google. I'm personally hoping that either part of this lawsuit or part of their Siri upgrade allows us to change it.
- tantalor 3y ago
  Does Siri show ads?
davidodio 3y ago
using Kagi is pretty clumsy. We iOS users get to pick from a pretty limited list. In reality we should be able to set search to any endpiont that handles the ‘q’ param

meiraleal 3y ago

> I guess the difference now is that Google is really big. Ok. But is that really the only reason? So as you are insinuating things why not be clear and name it? What is it, corruption? Or do you think that the fact that AOL deal wasn't considered illegal, no deal ever will be and Apple/Google are free to do as they please? Your idea of justice is quite weird.

jessicas_rabbit 3y ago
I believe OP was genuinely interested in identifying rationale for this discrepancy in legal precedent, regardless of any personal stance they hold on the justice of this business deal.
- mrgoldenbrown 3y ago
  OP didn't describe any particular legal precedent though, so we don't know why OP thinks the AOL deal was legal. There's a big difference between "nobody cared enough to sue or prosecute X behavior" and "X behavior has been tested in court and was ruled legal".
dang 3y ago
Can you please not post in the flamewar style? It's quite against the site guidelines: https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html. You can make your substantive points without that, so if you'd please do so instead, we'd be grateful.

burkaman 3y ago

I don't know the answer to your question, but the fact that the Google-AOL deal was never challenged doesn't mean it was legal. Plenty of illegal things are never challenged.

SllX 3y ago
Generally something is legal until there’s a law saying it isn’t. That’s kind of how it just works in America, and it not just here either. When that Google-AOl deal Google wasn’t even close to as popular as it is now. It was a simple distribution deal. People are tunneled in on the iPhone because that’s Apple’s juggernaut now but this deal with Apple also goes back to like 2002 when I was still convincing people to switch off Yahoo and MSN to Google. They also made a similar deal with Mozilla which is still basically how Mozilla is still able to operate at all. I mean 2002 Yahoo probably could have outspent 2002 Google. 2002 Microsoft definitely could have and it’s not like MSN was a juggernaut, but they were complacent. I’ll just say it: Google wanted it more. Search and Advertising was basically all they were at the time, no Gmail, no Google Maps, no YouTube or any of that other stuff we associate with them now, and they went out and took the opportunities they could. They developed a toolbar for IE users, setup distribution deals for the toolbar, put it in the Firefox directory, and sought out new avenues of information to index like when they acquired Deja News and Blogger, and subsequently launched Froogle, Google Blog Search, Google News, Alerts, Images, Patents, GOOG-411, etc. Even acquiring and developing Android was a play that ensured even if their relationships went south and Microsoft came to dominate Mobile in a way that was beginning to look a lot more possible in 2006 (and not so much in 2011) they would never be entirely locked out of Mobile if that ever became a thing (which uh, spoiler alert, it did). And when did Google really start to look like the juggernaut in the room? Well in Jan 2005 they had 35.1% of the search market to Yahoo’s 31.8% and a year later Google was at 41.4% to Yahoo’s 28.7%.[1] So probably you could say sometime about 2004 around when they IPO’d, maybe, is the soonest you could say they were really a juggernaut. That’s dominance but that sure isn’t anything close to a monopoly, and they were just outcompeting in both quality and distribution and in their search and ad product offerings. Acquiring DoubleClick even after Microsoft bid up the price was also a pretty good hat trick that was like a rocket booster for their ad business, putting Microsoft in a position where they had to spend almost twice as much for aQuantive only to write it down 5 years later. This is why antitrust law is so scuffed. The DOJ just ends up re-litigating old contracts and continuations of them hoping that in the current political climate they can find an angle for the headshot in front of a friendly judge. They’re going to lose hard while playing up whatever small victories they can get along the way while wasting a lot of money in court and then the administration is going to change again which might continue any cases in progress but is still going to have its political priorities shift. [1]: https://www.zdnet.com/article/search-engine-market-shares-in-jan-2006-google-41-4-yahoo-28-7-msn-13-7/ https://www.zdnet.com/article/search-engine-market-shares-in...

halJordan 3y ago

It's not illegal to have these deals; it's not illegal to have a monopoly. It's illegal to use your monopoly to prevent others from successfully competing. And again- no one has made the determination that it is illegal. The DOJ believes it's illegal, but the DOJ doesn't decide what's illegal. We're literally having the trial to figure it out. So, you're relying on overly simplistic assumptions that are misleading you. You can easily get the legal arguments, they're on Wikipedia, they're on the doj website, they're on the indictments. The information just needs you to go out and get it.

dmvdoug 3y ago
> The information just needs you to go out and get it. I am definitely going to use that. And since I teach ninth graders, I predict I will be using that on a daily basis. Blessings upon you. (And the curses of ~175 9th graders every year.)
- hashtag-til 3y ago
  These 9th graders are luck to have you! The skill of taking initiative and finding the drive to look for information is a very powerful one.
sonicanatidae 3y ago
Can anyone, anywhere demonstrate a public corporation that has a monopoly and hasn't abused it to keep competitors out? Bueller?...Bueller....

ksec 3y ago

>Ok. But is that really the only reason? Sentiment shift. Moral Compass in Silicon Valley ( or more like in the Tech Sector ), Smartphone Revolution and 15 years of zero interest rate. None of the reported are really "news" apart from the precise 36% figure which is higher than most of our initial estimate. "Customer acquisition cost" isn't new. On a similar note Google also share their Ad revenue with Mozilla / Firefox. We might not like a lot of what's going on with Google or Apple. But I dont think revenue share is in anyway wrong or illegal.

shiroiuma 3y ago
I think there should be prosecution of Apple based on this, not Google. Because of this huge cut, Apple won't allow other browsers on their platforms, which is anti-competitive.
- kergonath 3y ago
  > Because of this huge cut, Apple won't allow other browsers on their platforms, which is anti-competitive. That’s not the case, though. What some people complain about is the fact that other browsers must use the WebKit engine, but there is nothing stopping people from putting browsers in the App Store. This is not relevant to this deal. The engine does not matter at all, what matters is the user base.
  - freedomben 3y ago
    The engine absolutely matters! If you want to use a feature that is available in Chrome and Firefox, but not in webkit/safari, you are completely out of luck on iOS. Apple has been holding back web development for many years with this policy. I suspect it is to keep PWAs from being competitive with native apps, but whatever the motivation, that is very much the effect.
kergonath 3y ago
> But I dont think revenue share is in anyway wrong or illegal. It’s a thin line between revenue sharing, which is fine, and anticompetitive bribes to entrench your dominant position and extinguish competition, which is not. I am not saying that it’s the second case, but that’s what the DoJ wants to prove.

jedberg 3y ago

> I've not yet seen a legal explanation of why the Apple ad revenue share deal is now "illegal" and yet the AOL deal wasn't. Do you ever speed on the highway? Have you gotten a ticket for every time you did it? Just because you didn't get caught doesn't mean it's legal.

1vuio0pswjnm7 3y ago

"Somewhat similar deals also happen with tv networks where they sign exclusive "distribution deals" with sports leagues and they share the money they get from tv commercials (the ads)." Except the networks pay the leagues to broadcast games. With so-called "tech" companies, this is reversed. Google is paying Apple and Samsung so that no other search engine gets to be the pre-installed default. Sports leagues do not pay TV networks in order to prevent other leagues from doing deals with the networks. But Google pays hardware manufacturers to be the pre-instaled default and exclude other search engines.