Google Paid Apple $1B to Keep Search Bar on iPhone

Google Paid Apple $1B to Keep Search Bar on iPhone(bloomberg.com)

159 points by aaronkrolik 10 years ago | 54 comments

Title is misleading. Google didn't pay up front to keep the search bar, but rather agreed to share a percentage of the revenue generated, which ended up being $1B.

acchow 10 years ago | |

The title should be changed to reflect this

akvadrako 10 years ago | | |

why? It's effectively the same thing, except the risk profile is different. The resulting revenue wasn't a complete mystery so they probably knew the deal equaled about 1 billion.

anfroid555 10 years ago |

Oracle is really letting out Google secrets. First Android earnings, now this. Both said not to be public knowledge. Google going to go after oracle now?

Mahn 10 years ago | |

Well there was this a few weeks ago:

http://www.engadget.com/2015/12/30/google-will-strip-oracles...

Perhaps it pissed them off?

Consultant32452 10 years ago | |

How are they not being found in contempt?

will_brown 10 years ago | | |

There are two types of contempt (civil and criminal) and as a general rule contempt is triggered by violating a Court's Order(s). What Court Order has been violated?

Animats 10 years ago |

Google also used to pay Mozilla to be the search engine there, until Yahoo outbid them.

It's amazing that Google search, which is quite useful, has negative market value as content. In the cable TV world, there are channels cable systems pay to carry, such as ESPN, and channels that pay to be carried, such as the Jewelry Channel. How did Google end up in the latter category?

notatoad 10 years ago | |

Cable TV is a fundamentally wrong analogy here, because there is only one search bar and only one default search provider, not a near-infinite number of channels to be filled.

Being the default search engine on iPhone means you can generate a lot of revenue, and so it is a valuable position to sell. As you say, Google got outbid by Yahoo a couple years ago for Firefox. If Google weren't paying, apple would sell the search bar to somebody else.

ck425 10 years ago | | |

I don't use an iPhone so have to ask, can users not select the search engine they want to use? Oneplus tried to change the default search on their phones to Bing and the first thing I did was switch back to Google.

hkmurakami 10 years ago | | |

With that in mind, a radio spectrum analogy seems to be more apt.

babuskov 10 years ago | |

Looking from this distance, developing Chrome and working hard to gain market share for it looks like a really smart move by Google.

adventured 10 years ago | |

You're mistaking the context. You first acknowledged that Yahoo had to outbid Google to replace their search engine, which properly recognizes the situation: Google is replaced when it's outbid, or the real-estate owner otherwise has a better value gain to be had from other options.

In the case of Apple, they have numerous other highly valuable directions they could go with a piece of real estate on the iPhone, including selling it to Microsoft or Yahoo.

It would be like claiming that because every free app in existence isn't included by default on a phone, said non-included app/s must therefore have a negative value. My phone for example did not come with kik or viber pre-installed, therefore they have a negative value (not true).

ascagnel_ 10 years ago | | |

It's worth noting that non-search bar system searches (eg through Siri) are run through Bing. I'm not aware if this was a policy decision (give less power to Google) or a monetary decision (MS paid in an effort to push up Bing's numbers).

wodenokoto 10 years ago | | |

I don't agree. An iPhone without search is a really poor smartphone. An iPhone without Kik is not a poor smartphone.

Few people consider yahoo or bing search comparable in quality to google.

So what parent finds odd, is that Apple is asking the best in class to pay them, to improve their product.

fpgeek 10 years ago | |

I don't think it's about the market value of Google search in isolation (which is large and positive). Instead, it's about two things:

1. The power of browser defaults puts browser vendors in a strong position to demand a cut from third parties that make money from being a default.

2. Yahoo and Bing (plus some regional options) are realistic alternative bidders for this preferred placement. That dramatically tilts the bargaining power towards the browser vendor. With an alternative, however, a browser vendor still makes some money if negotiations with Google break down. Beyond that, a realistic alternative means Google loses more. Assuming negotiations broke down, more users would end up searching at Google if there were no search engine default than would if there were an alternative one.

To build on the cable analogy, suppose sports leagues were required by law to license their broadcasts (with the same terms) to any cable channel that wanted them. In that case, it wouldn't be hard for someone to put together ZSPN and bid away ESPN's carriage fees. ESPN doesn't just get those fees because they have valuable content - they can demand those fees because they have control over that content.

wodenokoto 10 years ago | |

You can look at it as paying for access, or you can look at it as revenue share.

lmm 10 years ago | |

Because Google are an advertising company. The company that we call Google is also the heir of Doubleclick.

tjl 10 years ago | | |

Google owns Doubleclick.

danielhughes 10 years ago |

Therefore the iPhone share of total search ad spend is about $3B. This link puts the overall market (inclusive of Android) at roughly $9B in 2014. That makes sense if you assume iOS to represent roughly 1/3 of devices.

http://www.emarketer.com/Article/Mobile-Account-More-than-Ha...

simonh 10 years ago | |

Isn't the $9B for all mobile advertising, not just mobile search advertising? According to a Glodman Sachs report for 2014, back then they estimated that iOS advertising accounted for 75% of Google's revenue on mobile. That would make the Android search ad space worth about $1B.

ck425 10 years ago | | |

Do you have a link to that report? I'd be curious to see if that's just the US or worldwide.

partiallypro 10 years ago |

Bing powers Siri, and I assume now powers all of the internet search functions (unsure about Safari.) So I wonder if Microsoft paid this amount, or if Apple decided that less money made more sense so they could harm their competitor?

evanriley 10 years ago | |

I thought Siri only used Bing because Google doesn't allow services like Siri to use google.com?

melted 10 years ago | | |

Pretty much. And Apple had to roll its own maps because Google would not allow Siri to use maps. Apple Maps are pretty darn good by now, so I think it's safe to assume that Apple started building their own search engine for Siri well before it made a deal with Microsoft, and Bing is a stop-gap measure. Apple likes to own its core technologies.

seanmcdirmid 10 years ago | |

Baidu powers Siri in China. It doesn't matter what language you set your device or Siri to.

meepers 10 years ago | |

you can also explicitly request Siri to search Google, and it will. you just have to ask, "Search Google XYZ" instead of "Search for XYZ."

softawre 10 years ago | | |

Heh, you made me realize I use "Google" as a synonym for search. "Google foo".

tianlins 10 years ago |

In a world so abundant of information, i think user attention is indeed a significant resource every major player should fight for. I guess the distribution of attention follows power law, that a few entrances take up most of the mobile use cases. For example, I use Uber, Wechat, GMaps much more often than the other apps. Search bar definitely is one of the most critical entrances.

SatoshiRoberts 10 years ago |

I wonder how much Google got charged for the opportunity in 2015

SatoshiRoberts 10 years ago |

That's about 5% of what Google has made in profit from Android since ~2008.

SatoshiRoberts 10 years ago |

I wonder how much Apple would pay for https://duckduckgo.com/ just to screw over Google.