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  • Google and Apple: Can You Believe This?

    August 16th, 2017

    Even though Android has a gigantic share of the mobile handset market, Google clearly needs Apple to generate income. How gigantic? I’m talking about roughly 85%, with iOS occupying roughly 15%. This varies a few points one way or the other from quarter to quarter.

    What this means is that Google has agreed to pay Apple fairly large fees to grab the default search position. Unless you change the search engine to Yahoo, Microsoft Bing or DuckDuckGo, it defaults to Google.

    Apple doesn’t make that decision by lottery or customer vote or out of the goodness of its corporate heart, although the fact that Google holds an 79.88% share counts for a lot. That’s based on August 2016 numbers — and there’s little that indication things have changed much — Bing has just 9.9%, lower than it was some years back. Yahoo rates for 8.34%. The rest are in the single digits.

    Now I suppose Apple could choose another default search engine because, well, Google is a competitor. But it’s also true that Google pays Apple a reported $3 billion annually to earn that default spot.

    In a sense it’s self-fulfilling prophecy, since most people don’t really fiddle with the default settings on one of their devices. With sales of a couple of hundred million iPhones a year, any change to the standard search engine would have a huge impact.

    Now one bit of data is particularly compelling. Despite Android’s larger market share, Google reportedly earns half its mobile search revenue from Apple and iOS. No wonder it was willing to write a $3 billion check.

    Don’t forget that Google gives away Android to mobile handset makers, hoping to derive income from search and app sales. In the second quarter of 2017, Google earned $3.1 billion as its cut for Google Play app sales, a fraction of its total revenue. Apple’s App Store sales are buried in the Services category, which brought in $7.3 billion for the comparable quarter. So the actual numbers would only be estimates, though still no doubt larger than Google.

    I’ve read predictions that claim that that Google will match or exceed the App Store later this year, but even if that happens, individual iOS developers will stand to make a lot more money.

    Then again, I don’t take such predictions seriously.

    The unfortunate thing about the search deal is that Google has attained such a high level of dominance, that anything it does can be construed as unfair. It consigns other search engines to niche status, and you almost wonder why some bother. So, for example, Yahoo is actually using Bing to power its search engine, so maybe it would be more accurate to say that Bing has a share that’s a tad over 18%. That does sound less demoralizing.

    Now things will get a tad more complicated when you realize that Google is the default search engine for Safari, and, of course, other browsers. But Microsoft’s Bing is used for Siri’s search engine unless you specify you want to use Google. Bing is also used for Spotlight.

    And, yes, Microsoft hasn’t earned that status because Tim Cook and Microsoft CEO Satya Nadella might like each other. It’s all about money, and Apple receives a decent paycheck for this deal.

    Now it may well be that most people still rely on Google search. But as Siri becomes smarter, more and more search requests will be processed in a way that bypasses Google. The same is obviously true for Spotlight. Sure, you can trick Spotlight to use a different search engine, but it’s hardly worth the effort.

    Does this mean that Google might ultimately lose a hefty portion of its search revenue because users of Apple gear will come to rely more on other ways to find stuff? Certainly if you want to be free of Google, you just change the search engine in Safari or the other browsers you might use.

    Indeed, you can even change the default search engine in Chrome, even on an Android handset. Most people won’t bother, but if you prefer Google’s browser, and don’t want to see them earn money from you, go ahead and change the default search engines across the board.

    You can live Google free.

    As a practical matter, I’m not necessarily opposed to Google. But I have had a fair amount of exposure to Android smartphones, and I don’t like them. What is simple on an iPhone may require lots of extra steps on a Samsung or another Android device. Just today I met an Uber rider who needed help finishing up a transaction on his cheap handset after the trip was done.

    He was trying to be nice, since Uber was offering to double tips due to a special promotion. But he couldn’t even get it to consistently recognize his payment method. I suppose he did sort all this out eventually, but is a crying shame that Google hasn’t focused more on usability. And, yes, he let me look at it and I, too, ran into multiple irritants in trying to make it work for him.

    But at least you can get a cheap Android phone if you’re on a budget.

    Now as to search engines: I don’t expect Google to suddenly lose prominence on Apple gear. But Siri and Spotlight might some day become Google’s worst enemy.



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    One Response to “Google and Apple: Can You Believe This?”

    1. dfs says:

      There’s another possible explanation for Apple’s favoring Google’s search engine — it works better than the competition. Might not Apple’s choice simply reflect respect for Google’s quality? This is, after all, the strong preference of most end users as well, who receive no payment for choosing one search engine over another. \

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