Google pays Apple $18B to $20B a year to keep its search in iPhone Google pays Apple between $18 billion to $20 billion a year to remain the dominant search engine in the iPhone, according to a financial analyst that thinks this deal, and others like it, are now at risk. Bernstein, which advises institutional investors on where to place their bets, yesterday published a report looking into …
If this deal gets cancelled and Bing numbers don't rise, Google will realize it was spending too much money for nothing while Microsoft will learn its engine is simply ignored because it's inferior. Apple will lose good money and might decide to spend more on its own engine. Interesting times.
I think the estimates might be faulty. In the one known case where the default search engine is Bing, Windows for desktop, Bing has only 10% market share and Google about 90%. It's likely that the same would happen on iOS, meaning that if Google was not the default search engine, they would lose only a fraction of the ad revenue.
Which begs the question, why does Google pay so much to be the default? You can change the default search engine in iDevices. Right now, most people don't, but I suspect they would figure out pretty quick how to do it if it wasn't Google.
Also, what % of searches on Bing are for the word "Google"?
They pay that much because they make that much and plenty more from search ad placement in the searches conducted by Safari users. Sure you can change the default, but Google is paying in the aggregate.
Even if half of Safari users changed the default (and it would obviously be nowhere near that) there would still be over a half billion people searching via Google and the ad revenue they'd derive from all those searches would still be massive. Google knows how many searches are coming from Safari, so they know they are getting their money's worth.
What makes you think people pick superior anything when they make their choices ?
Are you really going to tell me that Balmer won his position on merit ?
In the beginning was 8086 really superior to the other choices out there ?
Did DOS or Windows really win in the beginning because they were superior and thats why users chose them ?
Let's assume the DOJ does axe the deal. Apple may well just keep on defaulting Google for free. Though, given they like to at least pay lip service to privacy (as opposed to almost everyone else where you're lucky if they ask if you want lube) they may move to DuckDuckGo, which is just Google without a lot of the privacy invasion.
"I'm a little confused why Google is the one on the naughty step compared to Apple's anti-trust behaviour on the iStore"
Size, scope, and proportion of market probably makes the defining difference. When people defend Apple, they often try to explain that Apple shouldn't be subject to monopoly law because they're Apple and they're perfect. No, sorry, that's what they're thinking. What they say is that, since iPhones only hold a 20% market share worldwide, that's not a monopoly position and Apple should be free to restrict its product because you can always choose Android. That argument is flawed for several reasons, not the least of which is that in the US, where many of the cases are being tried, Apple's market share is about 55%, but it's still the argument they use.
Google's market share in web searches is a lot higher than that and the competitors not well-regarded. I use DuckDuckGo and have used Bing in the past, but there are people who haven't heard of the former and who regard the latter as a joke. In fact, I think Bing produces better results than Google does nowadays, because Google's search results have degraded every time I've tried it recently. Meanwhile, even the most ardent iPhone user still knows that Android phones exist, work, and are used by quite a few people. The importance of web searches to the general public is also well understood. I think these combine to mean that it's more difficult to defend Google's search monopoly than Apple's IOS app monopoly, and prosecutors like to focus on cases that are difficult to defend.
For that kind of money, I don't understand why Apple is thinking they get something out of this by enriching Google who should be their competitor given ChromeOS and other attempts to keep people somewhere other than on Apple products. Apple could improve their own co-financed search engine, maybe even pick up the ashes of AltaVista. But it's probably must easier to just accept the Google dosh.
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