4 ms·

It's 36% of revenue not even profit. Why would Google do such a deal?

thrill 3y ago
Because they believe it's in their financial interest to not have Apple's traffic go elsewhere. Even if they broke even on the deal, it starves the competition.
- olliej 3y ago
  Which is why this is coming up in an antitrust trial. People do talk about how “Google is legitimately better than the competition”[1] while ignoring the competition that never happens because there’s no path to profitability due to googl’s entrenched position. [1] which isn’t even necessarily true anymore: Google’s search results are awful these days and have been for years, because Google’s no longer competing on search it’s competing on ads.
  - xvilka 3y ago
    > Google’s search results are awful these days. Absolutely agree. One of the reasons I switched to Kagi.
    - kiwijamo 3y ago
      Same here although I went to DDG.
  - wkat4242 3y ago
    It absolutely is. Even bing/ddg is better now. Though I find I use search very little now. If I just want to know something I don't Google it anymore, I just ask chatgpt. Because it will give me an actual answer instead of a long list of clickbait sites I have to sift through to find my answer. The only time search still makes sense to me is when I need to find an actual website which is actually not all that often.
mcphage 3y ago
Because it motivates Apple to not develop their own search engine.
- crossroadsguy 3y ago
  As in Google thinks Apple, a company that hasn’t been able to run a first rate (no make it second rate) software service after years - not one, will be able to make something that replaces Google Search? That’s a bit difficult to believe. But then I believe Google wasn’t thinking Apple could do it well at all. I think Google is sure of - is the typical Apple customer base that will just gobble up whatever Apple shoves down their throat, heartily. Yeah, I think it’s this one :)
  - fooker 3y ago
    OTOH Apple could easily buy a company that has a good search product. And it could even rival Google if they don't have to optimize for increasing ad revenue.
    - chias 3y ago
      Please, please no. In the last six months I have finally found an independent search engine I actually like. Don't you dare take it away from me.
    - anukin 3y ago
      Have they not done the same with ML/AI and have very little to show for it. What makes you think the result would be different in search?
      - fooker 3y ago
        One is a research problem, the other is a an engineering problem. Sure search was a research problem 30 years ago, but most competent undergrads can design a search engine now. You need engineering power to scale it and admins to keep it running.
  - 3y ago
JCM9 3y ago
Because most users don’t switch the default search settings on their phone and Google’s search revenue would plummet if they lost iPhone traffic. Basically Google depends on paying another company to make sure a bunch of people accidentally use their core product. Yes, that’s a pretty crappy spot for Google to be in but they’ve not had much luck in any business outside search so they’re sorta stuck.
- jacquesm 3y ago
  Google's core product is advertising, not search.
  - lancesells 3y ago
    With most of that advertising revenue coming from their search engine. If Bing was the default Google ad revenue would go down by billions.
  - cmrdporcupine 3y ago
    Search ads
  - EricE 3y ago
    And just how do you think they deliver the bulk of their advertising?!?
taspeotis 3y ago
Because it’s worth 36% of revenue? Google is not unsophisticated, if it was worth less they would pay less.
- thaumasiotes 3y ago
  > Google is not unsophisticated, if it was worth less they would pay less. That isn't how relationships work, regardless of sophistication. There was a link yesterday about bug bounties, so here's a story from my time handling bug bounties: 1. A major website published a policy setting out their payment schedule for various types of vulnerabilities. 2. A particular researcher submitted an issue which he plausibly characterized as falling into a high-value class of vulnerabilities. He received an award based on that classification. 3. The same guy continued to find vulnerabilities on that platform. He would always include a discussion of how to use his new vulnerability to implement an attack in the high-value category. There was an obvious reason for this: his typical vulnerability was a bog-standard cross site scripting attack, and XSS was specifically listed in the payment schedule as less valuable than the attack type this researcher wanted to be paid for. 4. Every time one of these reports came in, I would forward it to the company with the note "This is a standard cross-site scripting attack, and your policy specifies that it is worth a bounty of $XXX. The researcher notes that this vulnerability can be used to implement an attack with effect Y, and he is correct, but this is true of all cross-site scripting attacks on your site." 5. Then the company would pay out the higher-value bounty. So this is an example of the value of the report being set unambiguously in public, and a large, "sophisticated" company deliberately ignoring that because they didn't want to adjust their relationship with one particular researcher. (Other researchers reporting identical vulnerabilities didn't know the magic words; they got the listed payout for XSS.)
mdasen 3y ago
Because if Google doesn't, then it could see its search monopoly evaporate. The vast majority of rich people in the world use iPhones. In the US/Canada/UK/Australia/Japan and many more rich countries, the iPhone is the most common device - and even within those countries, the iPhone's demographics skew wealthier. iPhone users are a ton more valuable to advertisers than Android users - they have more money and they're willing to pay for premium things. Let's say Apple switched to Bing. Most users won't know how to change their search settings so Bing will now get 90%+ of iPhone search traffic (and the most valuable search traffic). This puts rocket fuel into Bing's ad business. Advertisers don't just think Google and nothing else. Suddenly, Bing is potentially more important since iPhone (and Mac) users that they want to reach are going through Bing. This has big implications for Google's ad business beyond just traffic loss. When we're talking about bidding, more bidders push up the price. It's not just about losing the iPhone's traffic. It's also about losing the ad bidders on the other side. If you're a monopoly on search ads and you lose 30% of your search traffic to a competitor, you are probably losing a lot more than 30% of your revenue. This is because part of your revenue exists due to people getting outbid. Let's say that you and I are bidding for the "laptop" keyword. You bid $1 and I bid $2 to outbid you. Google gets $2. If I decide to move my bidding over to Bing, you get the laptop keyword for $1 and Google's revenue is halved for that keyword - and they're only getting 70% as much traffic on top of that. As traffic shifts, bidders will shift. As bidders shift, the amount paid for the traffic still coming to Google could decline in addition to their traffic declining. So it's not just the loss of Apple-device traffic. It's the loss of bidders that drive up the price of ads even when they lose. And this has knock-on effects for Google's businesses. If Bing's search ads get this rocket fuel, they start getting the attention to take on Google's ad business for publishers. Google has been steering searches to their properties, but all of a sudden Bing could start steering searches to Microsoft owned properties. Maybe LinkedIn figures out how to get people to post videos in a YouTube-competitive way - and with the most valuable traffic being steered toward those videos. Yea, LinkedIn is supposed to be professional, but it's kinda lost a lot of that over time with random click bait already. Being the default search engine is a powerful position. You might say that you'd use Google no matter what and we're on HN so you probably know how to change the default search engine. Most people would just end up going along with whatever the default is. Google rose to prominence via their search results, but people aren't feeling as happy about Google's search today. Google has kept their dominance by paying to be the default search engine for almost everyone - either by paying Apple and Mozilla or by paying engineers to create Chrome (and putting a lot of marketing money behind it).
quickthrowman 3y ago
Because iOS users are substantially more valuable than Android users, 6-8x more valuable. I’m positive that Google comes out ahead on this by selling ads to iOS users.

Because they believe it's in their financial interest to not have Apple's traffic go elsewhere. Even if they broke even on the deal, it starves the competition.

olliej 3y ago
Which is why this is coming up in an antitrust trial. People do talk about how “Google is legitimately better than the competition”[1] while ignoring the competition that never happens because there’s no path to profitability due to googl’s entrenched position. [1] which isn’t even necessarily true anymore: Google’s search results are awful these days and have been for years, because Google’s no longer competing on search it’s competing on ads.
- xvilka 3y ago
  > Google’s search results are awful these days. Absolutely agree. One of the reasons I switched to Kagi.
  - kiwijamo 3y ago
    Same here although I went to DDG.
- wkat4242 3y ago
  It absolutely is. Even bing/ddg is better now. Though I find I use search very little now. If I just want to know something I don't Google it anymore, I just ask chatgpt. Because it will give me an actual answer instead of a long list of clickbait sites I have to sift through to find my answer. The only time search still makes sense to me is when I need to find an actual website which is actually not all that often.

mcphage 3y ago

Because it motivates Apple to not develop their own search engine.

crossroadsguy 3y ago
As in Google thinks Apple, a company that hasn’t been able to run a first rate (no make it second rate) software service after years - not one, will be able to make something that replaces Google Search? That’s a bit difficult to believe. But then I believe Google wasn’t thinking Apple could do it well at all. I think Google is sure of - is the typical Apple customer base that will just gobble up whatever Apple shoves down their throat, heartily. Yeah, I think it’s this one :)
- fooker 3y ago
  OTOH Apple could easily buy a company that has a good search product. And it could even rival Google if they don't have to optimize for increasing ad revenue.
  - chias 3y ago
    Please, please no. In the last six months I have finally found an independent search engine I actually like. Don't you dare take it away from me.
  - anukin 3y ago
    Have they not done the same with ML/AI and have very little to show for it. What makes you think the result would be different in search?
    - fooker 3y ago
      One is a research problem, the other is a an engineering problem. Sure search was a research problem 30 years ago, but most competent undergrads can design a search engine now. You need engineering power to scale it and admins to keep it running.
- 3y ago

JCM9 3y ago

Because most users don’t switch the default search settings on their phone and Google’s search revenue would plummet if they lost iPhone traffic. Basically Google depends on paying another company to make sure a bunch of people accidentally use their core product. Yes, that’s a pretty crappy spot for Google to be in but they’ve not had much luck in any business outside search so they’re sorta stuck.

jacquesm 3y ago
Google's core product is advertising, not search.
- lancesells 3y ago
  With most of that advertising revenue coming from their search engine. If Bing was the default Google ad revenue would go down by billions.
- cmrdporcupine 3y ago
  Search ads
- EricE 3y ago
  And just how do you think they deliver the bulk of their advertising?!?

taspeotis 3y ago

Because it’s worth 36% of revenue? Google is not unsophisticated, if it was worth less they would pay less.

thaumasiotes 3y ago
> Google is not unsophisticated, if it was worth less they would pay less. That isn't how relationships work, regardless of sophistication. There was a link yesterday about bug bounties, so here's a story from my time handling bug bounties: 1. A major website published a policy setting out their payment schedule for various types of vulnerabilities. 2. A particular researcher submitted an issue which he plausibly characterized as falling into a high-value class of vulnerabilities. He received an award based on that classification. 3. The same guy continued to find vulnerabilities on that platform. He would always include a discussion of how to use his new vulnerability to implement an attack in the high-value category. There was an obvious reason for this: his typical vulnerability was a bog-standard cross site scripting attack, and XSS was specifically listed in the payment schedule as less valuable than the attack type this researcher wanted to be paid for. 4. Every time one of these reports came in, I would forward it to the company with the note "This is a standard cross-site scripting attack, and your policy specifies that it is worth a bounty of $XXX. The researcher notes that this vulnerability can be used to implement an attack with effect Y, and he is correct, but this is true of all cross-site scripting attacks on your site." 5. Then the company would pay out the higher-value bounty. So this is an example of the value of the report being set unambiguously in public, and a large, "sophisticated" company deliberately ignoring that because they didn't want to adjust their relationship with one particular researcher. (Other researchers reporting identical vulnerabilities didn't know the magic words; they got the listed payout for XSS.)

mdasen 3y ago

Because if Google doesn't, then it could see its search monopoly evaporate. The vast majority of rich people in the world use iPhones. In the US/Canada/UK/Australia/Japan and many more rich countries, the iPhone is the most common device - and even within those countries, the iPhone's demographics skew wealthier. iPhone users are a ton more valuable to advertisers than Android users - they have more money and they're willing to pay for premium things. Let's say Apple switched to Bing. Most users won't know how to change their search settings so Bing will now get 90%+ of iPhone search traffic (and the most valuable search traffic). This puts rocket fuel into Bing's ad business. Advertisers don't just think Google and nothing else. Suddenly, Bing is potentially more important since iPhone (and Mac) users that they want to reach are going through Bing. This has big implications for Google's ad business beyond just traffic loss. When we're talking about bidding, more bidders push up the price. It's not just about losing the iPhone's traffic. It's also about losing the ad bidders on the other side. If you're a monopoly on search ads and you lose 30% of your search traffic to a competitor, you are probably losing a lot more than 30% of your revenue. This is because part of your revenue exists due to people getting outbid. Let's say that you and I are bidding for the "laptop" keyword. You bid $1 and I bid $2 to outbid you. Google gets $2. If I decide to move my bidding over to Bing, you get the laptop keyword for $1 and Google's revenue is halved for that keyword - and they're only getting 70% as much traffic on top of that. As traffic shifts, bidders will shift. As bidders shift, the amount paid for the traffic still coming to Google could decline in addition to their traffic declining. So it's not just the loss of Apple-device traffic. It's the loss of bidders that drive up the price of ads even when they lose. And this has knock-on effects for Google's businesses. If Bing's search ads get this rocket fuel, they start getting the attention to take on Google's ad business for publishers. Google has been steering searches to their properties, but all of a sudden Bing could start steering searches to Microsoft owned properties. Maybe LinkedIn figures out how to get people to post videos in a YouTube-competitive way - and with the most valuable traffic being steered toward those videos. Yea, LinkedIn is supposed to be professional, but it's kinda lost a lot of that over time with random click bait already. Being the default search engine is a powerful position. You might say that you'd use Google no matter what and we're on HN so you probably know how to change the default search engine. Most people would just end up going along with whatever the default is. Google rose to prominence via their search results, but people aren't feeling as happy about Google's search today. Google has kept their dominance by paying to be the default search engine for almost everyone - either by paying Apple and Mozilla or by paying engineers to create Chrome (and putting a lot of marketing money behind it).

quickthrowman 3y ago

Because iOS users are substantially more valuable than Android users, 6-8x more valuable. I’m positive that Google comes out ahead on this by selling ads to iOS users.