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Apple believed to rake in over $1 billion yearly from Google search referrals

post #1 of 34
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Apple's tangled relationship with Google is also a profitable one for the iPhone maker, as one analyst estimates Apple pulls in $1 billion in pure profit from a search agreement between the two companies.

In a recent report from Morgan Stanley titled "The Next Google is Google," analyst Scott Devitt estimates that Google pays Apple roughly $1 billion per year in order to position its search engine as the default option on iOS devices.

iMacs
Morgan Stanley chart estimating Google's Traffic Acquisition Costs via Business Insider


Such an agreement would remain beneficial to both Apple and Google, despite the growing complications brewing between the two firms.

The sum of $1 billion per year is almost a rounding error for Apple, which pulled in $13 billion in profit last quarter, but it would represent a pure profit stream for the Cupertino company, one acquired with little effort on Apple's part.

For Google, which pulled in $2.89 billion in profits for the last quarter, the billion dollar agreement amounts to a traffic acquisition cost: about $250 million per quarter in order to keep a massive mobile platform reliant on Google search by default. Google is also largely reliant upon iOS for mobile revenue, earning 80 percent of its ad revenue from 2008 to 2011 from iOS devices.

This isn't the first time a billion dollar estimate has emerged regarding iOS and Google. In March of last year, an analyst at Macquarie posited largely the same thing, with an additional estimate of roughly $300 million in profit for Google from the arrangement. In 2010, rumors emerged that Google was paying Apple more than $100 million in a revenue sharing deal in order to retain the default search spot on the iPHone.

Google, the world's largest search engine, is already known to pay other companies in order to keep Google search the default option. In addition to Apple, Devitt estimates that Google will pay $300 million to Mozilla ? makers of the Firefox web browser and Firefox mobile operating system ? in order to keep Google as the default search on that group's products.
post #2 of 34

Google makes money by building great stuff for Apple.  Apple makes money by Google making great stuff for Apple's great products.    YAY!!

 

Can't we all just be friends?

post #3 of 34
Quote:
Originally Posted by Frood View Post

Google makes money by building great stuff for Apple.  Apple makes money by Google making great stuff for Apple's great products.    YAY!!

Can't we all just be friends?

So now Apple makes nothing that Google uses to profit from? Lets look at iOS and Android. Only one of those has netted a profit for Google.

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

 

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post #4 of 34
Quote:
Originally Posted by SolipsismX View Post

So now Apple makes nothing that Google uses to profit from? Lets look at iOS and Android. Only one of those has netted a profit for Google.

I think that's what he was trying to get at.
"I got the answer by talking in my brain and I agreed of the answer my brain got" a 7 yr old explaining his math HW
"Just because something is deemed the law doesn't make it just" - SolipsismX
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post #5 of 34
Quote:
Originally Posted by dasanman69 View Post

I think that's what he was trying to get at.

In both statements he said that Google makes great stuff for Apple so to me it reads as my query suggests.

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

 

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post #6 of 34
Interesting.

Other analysts have suggested that Google pays a high ad revenue share rate to Apple.

This analyst claims instead that Google is paying Apple a flat rate of ~$3.30 per iOS device to be the default search engine in mobile Safari.

Sounds like everyone's still guessing.
Edited by KDarling - 2/10/13 at 5:40pm
post #7 of 34
Quote:
Originally Posted by SolipsismX View Post

In both statements he said that Google makes great stuff for Apple so to me it reads as my query suggests.

But he did say 'Apple products' which is something Apple makes, of which Google uses to make money as well as Apple. He just did a bad job wording it.
"I got the answer by talking in my brain and I agreed of the answer my brain got" a 7 yr old explaining his math HW
"Just because something is deemed the law doesn't make it just" - SolipsismX
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"I got the answer by talking in my brain and I agreed of the answer my brain got" a 7 yr old explaining his math HW
"Just because something is deemed the law doesn't make it just" - SolipsismX
Reply
post #8 of 34
Android is winning /s
post #9 of 34
$1B is not a rounding error to any company
post #10 of 34
Quote:
Originally Posted by ifij775 View Post

$1B is not a rounding error to any company

 

It is a rounding error. It's roughly 1/60th the profit and 1/200th the gross.

post #11 of 34
Quote:
Originally Posted by Lord Amhran View Post

Android is winning /s

Yes android is definitely winning the spyware war.

Imagine that;  everything an android user does is spied on by Google !

post #12 of 34
Quote:
Originally Posted by mdriftmeyer View Post

It is a rounding error. It's roughly 1/60th the profit and 1/200th the gross.

$1b is apple's entire r&d spending in 2011.
post #13 of 34
Quote:
Originally Posted by mdriftmeyer View Post

It is a rounding error. It's roughly 1/60th the profit and 1/200th the gross.

Wouldn't that be net profit and therefore be about 2% of their entire company's profit last year? That doesn't sound like a rounding error to me.


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post #14 of 34
Quote:
Originally Posted by SolipsismX View Post


So now Apple makes nothing that Google uses to profit from? Lets look at iOS and Android. Only one of those has netted a profit for Google.

 

Sorry if I was confusing.  Don't read too much into it.  I think Apple makes great products.  I think Google makes incredibly good products too (along with some downright goofy stuff).

 

I think Google making stuff for Apple is great for Apple users (they can always choose to use something else if they don't like it).  Not only is it good for users- but it is profitable.  For both Google and for Apple.

 

Sometimes fighting just for the sake of fighting isn't the best solution.

post #15 of 34
@ Dave MacLachlan,

I was editing an image of the actual card in Preview when I was looking for the most appropriate font to use for Monopoly cards when I stumbled upon a site that generates images with your text.

My only complaint is how small the images are.
Edited by SolipsismX - 2/10/13 at 7:07pm

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

 

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post #16 of 34

Originally Posted by asdasd

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post #17 of 34
Quote:
Originally Posted by mdriftmeyer View Post

 

It is a rounding error. It's roughly 1/60th the profit and 1/200th the gross.

Apple's income statements are rounded to the nearest $1M, regardless of their percentage of revenue or profit.

post #18 of 34
Quote:
Originally Posted by ifij775 View Post

Apple's income statements are rounded to the nearest $1M, regardless of their percentage of revenue or profit.

Isn't it to the $10 million since it would be something like $13.24 billion in profit?

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

 

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post #19 of 34
Quote:
Originally Posted by SolipsismX View Post

Quote:
Originally Posted by ifij775 View Post

Apple's income statements are rounded to the nearest $1M, regardless of their percentage of revenue or profit.

Isn't it to the $10 million since it would be something like $13.24 billion in profit?

Apple presents all of its official financials in millions (for dollar figures) and thousands (for units sold).

post #20 of 34
Quote:
Originally Posted by Frood View Post

Google makes money by building great stuff for Apple.  Apple makes money by Google making great stuff for Apple's great products.    YAY!!

Can't we all just be friends?

No because google is pure evil
post #21 of 34
I am somewhat disappointed in Apple.
If thermonuclear means google to remain as one of the default search engines on iDevices, then we have an extreme case of a contradiction.
Apple can easily absorb the lost revenue in the short term and then perhaps (if conditions are ripe) get into search themselves.
Just like they did with Maps. Perhaps time will tell.
post #22 of 34
Originally Posted by hfts View Post
If thermonuclear means google to remain as one of the default search engines on iDevices, then we have an extreme case of a contradiction.

 

Why? What did Google Search steal from Apple?

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post #23 of 34
If Mozilla rakes in $300 million per year by simply having Google as a default setting, why are they discontinuing Thunderbird? It would seem that they have cash-o-plenty to support that great mail client.

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post #24 of 34
Quote:
Originally Posted by Tallest Skil View Post

Why? What did Google Search steal from Apple?

Nothing, that's not the point.
They, google, hold true to everything I am against. It's that simple, so I do not trust them.
I think the reasons why have been discussed here many times.
What will you do, if someday, google forced you to have an account before you can use their search engine? Would you still use it?
post #25 of 34

I'm pretty sure Microsoft would pay way more than $1 billion.

They paid that massive sucker price for Skype, after all.

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post #26 of 34
Quote:
Originally Posted by hfts View Post


Nothing, that's not the point.
They, google, hold true to everything I am against. It's that simple, so I do not trust them.
I think the reasons why have been discussed here many times.
What will you do, if someday, google forced you to have an account before you can use their search engine? Would you still use it?

10's of millions of people have accounts with Google, even tho they're not for forced to. Others benefit from using their outstanding search features without even being "identifiable". You can use their services, take advantage of the value of their products, and pay absolutely nothing to do so. They don't require a credit card.

 

I've never understood the irrational fear of seeing an ad for something you might really have an interest in. That's all Google does isn't it? To pay for your "free search"  they give companies (like Apple) a way to pay to get their products in front of people that have shown an interest in something at least similar if not a perfect match. Somehow that's evil? If not then what is it they are doing to you to be "everything you are against"?

 

Apple doesn't have any problem with Google being the default search provider for their users (it comes pre-installed!) and you trust Apple to do what's best for you don't you? Afterall, if Google was truly evil then wouldn't that make Apple evil too for taking "30 pieces of silver" they don't even need just to sell you out to Google's devious schemes?


Edited by Gatorguy - 2/11/13 at 5:53am
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post #27 of 34
post #28 of 34
Quote:
Originally Posted by hfts View Post


Nothing, that's not the point.
They, google, hold true to everything I am against. It's that simple, so I do not trust them.
I think the reasons why have been discussed here many times.
What will you do, if someday, google forced you to have an account before you can use their search engine? Would you still use it?

 

Apple forces you to have an account before using your iPhone.  Instead of just requiring an email address to give it to you, you have to give them a ton of information.  Credit cards etc.  They track everything you do.  They don't advertise to you, but they sell your anonymous info to anyone who wants it.  It's your IDFA on the iPhone and you can't disable it.  It's not any different from what Google does, except you don't have the option of opting out.  I say whats the big deal.

post #29 of 34
Quote:
Originally Posted by dav View Post

 

That's lends credence to my post. Google will still let you access their wide range of valuable services while avoiding giving anything in return. Just add "do-not-track" plug-in's to your browser. Even Google offers them. Hardly evil.

 

But that still won't keep sites such as AI and millions of others from harvesting and monetizing user data. There's a whole lot of cookies being placed here and everywhere that have nothing to do with Google. 

http://www.zdnet.com/googles-chrome-finally-embraces-do-not-track-but-with-a-warning-7000007022/


Edited by Gatorguy - 2/11/13 at 5:10am
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post #30 of 34
Originally Posted by hfts View Post
What will you do, if someday, google forced you to have an account before you can use their search engine? Would you still use it?

 

I already don't! But I can imagine tens of millions of others will also flee to different browsers at that time. 

 

Originally Posted by dav View Post
http://donttrack.us/

 

Indeed, but it's probably not enough on its own.


Originally Posted by Gatorguy View Post
Just add "do-not-track" plug-in's to your browser. Even Google offers them. Hardly evil.

 

The question then becomes whether this should have to happen at all. The situation in which a consumer is being placed here feels sort of like the… fundamental mindset behind "innocent until proven guilty", except using different words, of course. I'm trying to think of what those would be.

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post #31 of 34
Quote:
Originally Posted by Tallest Skil View Post

 

I already don't! But I can imagine tens of millions of others will also flee to different browsers at that time. 

 

 

Indeed, but it's probably not enough on its own.

 

The question then becomes whether this should have to happen at all. The situation in which a consumer is being placed here feels sort of like the… fundamental mindset behind "innocent until proven guilty", except using different words, of course. I'm trying to think of what those would be.

It's not Google making a stink about "do-not-track" efforts. It's the advertisers and website admins themselves.

http://phys.org/news/2012-11-track-privacy-effort-crossroads.html

 

Couple that with "What does Do-Not-Track really mean?" If you're a website operator it may mean something different than what you as a visitor had in mind. 

http://adage.com/article/guest-columnists/track-online/234559/


Edited by Gatorguy - 2/11/13 at 8:42am
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post #32 of 34
Quote:
Originally Posted by Gatorguy View Post

That's lends credence to my post. Google will still let you access their wide range of valuable services while avoiding giving anything in return. Just add "do-not-track" plug-in's to your browser. Even Google offers them. Hardly evil.

Yeah, too bad Google doesn't understand what "do not track" means.

http://money.cnn.com/2012/02/17/technology/google_tracking_safari/index.htm
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post #33 of 34
Quote:
Originally Posted by jragosta View Post


Yeah, too bad Google doesn't understand what "do not track" means.

http://money.cnn.com/2012/02/17/technology/google_tracking_safari/index.htm

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post #34 of 34
Quote:
Originally Posted by jragosta View Post

Yeah, too bad Google doesn't understand what "do not track" means.
http://money.cnn.com/2012/02/17/technology/google_tracking_safari/index.htm

 

Interesting article to pick as a reference.  It ends with this comment:

 

 

"Let's step back a second here and ask: why do you think Apple has made it impossible for advertising-driven companies like Google to execute what are industry standard practices on the open web?" author John Battelle, who founded an ad network and wrote a book about Google, wrote in a blog post.

"Do you think it's because Apple cares deeply about your privacy? Really?" Battelle asked. "Or perhaps it's because Apple considers anyone using iOS, even if they're browsing the web, as 'Apple's customer,' and wants to throttle potential competitors."

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