So, in other words, $25B worth of attention is transferred from iOS users to Google[1], which Google pays Apple $3B for this access.<p>[1] <a href="https://www.recode.net/2017/7/24/16020330/google-digital-mobile-ad-revenue-world-leader-facebook-growth" rel="nofollow">https://www.recode.net/2017/7/24/16020330/google-digital-mob...</a>
>On the other hand, Sacconaghi said that Apple's iOS devices contribute about 50 percent to Google's mobile search revenue, which means Google might be too afraid to walk away from its licensing deal with Apple.<p>50%? Am I reading this right, that iOS makes up 50% of Google's mobile search revenue? IDC reports that Android made up 85% of the mobile OS market share in Q1-17, while iOS makes up 14.6%. How could iOS be contributing half of the mobile search revenue when Google's own OS is on most of the mobile devices in the world?<p>[0]<a href="https://www.idc.com/promo/smartphone-market-share/os" rel="nofollow">https://www.idc.com/promo/smartphone-market-share/os</a>
> "Court documents indicate that Google paid Apple $1B in 2014, and we estimate that total Google payments to Apple in FY 17 may approach $3B," Bernstein analyst A.M. Sacconaghi Jr. said. "Given that Google payments are nearly all profit for Apple, Google alone may account for 5% of Apple's total operating profits this year, and may account for 25% of total company OP growth over the last two years."<p>It's crazy considering even if Apple switched default search engines I'm sure a lot of users would switch back to Google.
It's in Google's best interest to keep the price high... it raises the price for any potential competitor who might try to outbid them.<p>Google knows how much money it makes through iPhone... a potential competitor could only guess how much money could be made by being the new default search engine (especially since the number of people who would be loyal to Google and switch away from the new default is a big unknown).<p>It's interesting to see exactly how valuable it is (or how valuable people think it is) to be the market leader.<p>If Google lost the iPhone default position, their customers (i.e. advertisers) would see them differently.
Apple is developing its search engine. If you use iOS search you might notice there are results that are not either Bing or maps results. Map on its own eats lots of Google's search share because people search on their iPhones for locations and businesses a lot.
With iOS 11 you can type your Questions to Siri for results, replacing some of your Searches. I remember vaguely that 80% of all searches are some specific type that Apple could replicate in Siri "Should they choose to".<p>I think the End Game will be Apple providing very good, high quality curated Search Results for its Users, Eating up to 40% of Google's Mobile revenue. ( 80% of searches and 50% of Mobile Revenue coming from iPhone ).<p>That is, of course assuming Apple could do Searches or Services, judging from the few years of Apple Map, Apple Music, iCloud etc. This segment is simply not in their DNA.<p>Notes: Some may argue Apple's Services Revenue continues to increase, but if you look at the break down majority of it are from App Store, and majority of App Store Revenue are from Gaming, which ironically is a category Apple doesn't care much.
"Sacconaghi said that Google might decide to back away from paying Apple any licensing fees if it feels confident enough that its search engine is so popular Apple won't include any other option by default."<p>Wasn't there a period just a few years ago when Apple switched to Bing platform wide? Or am I mistaken?
Well, I'm dealing with a bootloop-ed Nexus 5X, with no help from Google nor its manufacturer, LG.<p>My previous Android phone, a 2013 Moto X bought while Google owned the cell phone part of Motorola and was promising users (finally) timely, consistent updates, was largely abandoned with respect to updates within a year. This also involved Verizon, for me, who was promising... finally, timely and continuing updates, for this now Google phone -- no, really, believe us, despite our history.<p>So... I guess Google better be paying <i>someone</i> to maintain their presence in mobile.<p>Maybe they should have paid <i>me</i> and all their other Android users a little better attention. Because I'm seriously considering an iPhone as a replacement for my 5X brick.
Mmm... I doubt they would set Bing or Yahoo as the default search engine and alienate all their users.<p>Every time I use those SE, I realize how good Google is.
When advertising companies start paying large sums of money to product companies, you know that there is something wrong with the economy...<p>Money should flow from product companies to advertising companies; there is something sinister about money moving in the opposite direction.
most users would switch it to google if apple switched it to bing or something else meaning Google is paying them for just the ease of not having the risk of not being default.