Google paid 36% of Safari search revenue to Apple

AppleInsider

Apple's search deal with Google is very lucrative to the company, a court witness claims, with the iPhone maker said to receive about 36% of the revenue generated from Safari search result advertising.

In Monday's continuation of the Justice Department's antitrust trial against Alphabet, a witness took to the stand to defend Google, but in the process revealed a key financial figure.

Bloomberg reports that Kevin Murphy, a professor at the University of Chicago, told the court that Apple gets in the region of 36% of the revenue for Google searches in the Safari browser, due to the deal to make Google the main search in the browser.

The high percentage isn't unexpected, as it was previously reported that Apple earns in the region of $20 billion per year from search deals. Prosecutors believe the figure reached $26.3 billion in 2021.

If Google fails to defend itself in the trial, it could end up creating a big hole in Apple's Services revenue.

Both Apple and Google reportedly objected to the public revelation of details in the deal.

What's the deal?

The DOJ case against Google is based on a long-standing agreement between Google and Apple to set Google as the default search provider in Safari, Apple's browser.

The agreement was lucrative for both sides, with Apple securing regular payments from the search giant. Google, meanwhile, benefited from being the search that most Safari users used, furthering its position in the search market and serving advertising to a larger audience.

The case has led to executives from Google, Apple, and Microsoft on the matter.

Apple's SVP Eddy Cue took to the stand in September, telling the court that it wanted Google as default search for a few reasons, including that it was "the best" option to offer consumers.

Google Sundar Pichai did the same, explaining that the deal made Google "seamless and easy" for consumers to use. Meanwhile Microsoft CEO Satya Nadella testified that the search deal unfairly hurt Bing since it couldn't work to improve its market share against the Google behemoth.

Meanwhile, Kenneth Dintzer, DoJ Deputy Branch Director, said in his opening remarks in September "Defaults are powerful, scale matters and Google illegally maintained a monopoly for more than a decade."

The trial was expected to last for ten weeks, and is heading towards its closing stages.

Read on AppleInsider

wonkothesane

So, the usual 30/30 split 

avon b7

While it's difficult to know for sure (from what few details have leaked out so far) it looks like Apple could end up with some collateral damage.

Using the best solution available and using the solution that reports basically money for nothing, money to stay off someone else's turf or teaming up to impede competition might cross some lines depending on how the setup came about or works in practice.

I'd say neither Google nor Apple are sitting comfortably as this plays out. 

tmay

AppleInsider said:

Apple's search deal with Google is very lucrative to the company, a court witness claims, with the iPhone maker said to receive about 36% of the revenue generated from Safari search result advertising.

In Monday's continuation of the Justice Department's antitrust trial against Alphabet, a witness took to the stand to defend Google, but in the process revealed a key financial figure.

Bloomberg reports that Kevin Murphy, a professor at the University of Chicago, told the court that Apple gets in the region of 36% of the revenue for Google searches in the Safari browser, due to the deal to make Google the main search in the browser.

The high percentage isn't unexpected, as it was previously reported that Apple earns in the region of $20 billion per year from search deals. Prosecutors believe the figure reached $26.3 billion in 2021.

If Google fails to defend itself in the trial, it could end up creating a big hole in Apple's Services revenue.

Read on AppleInsider5 

As a percentage of 2022 revenue basis, Apple is getting 6.6% of its revenue from Google, and Google is getting 16.7% of its revenue from Apple.

What would the revenue for Google have been sans the deal, and was Google really concerned about Apple getting deeper into the search business, or was the deal just an insurance policy?

danox

avon b7 said:

While it's difficult to know for sure (from what few details have leaked out so far) it looks like Apple could end up with some collateral damage.

Using the best solution available and using the solution that reports basically money for nothing, money to stay off someone else's turf or teaming up to impede competition might cross some lines depending on how the setup came about or works in practice.

I'd say neither Google nor Apple are sitting comfortably as this plays out. 

Google is sitting pretty in the end they will get access like Spotify for nothing, the gatekeepers as defined by the EU, should be cleared off of each others patch, for the sake of all the small to medium size developers it will never happen. 

tmay

danox said:

avon b7 said:

While it's difficult to know for sure (from what few details have leaked out so far) it looks like Apple could end up with some collateral damage.

Using the best solution available and using the solution that reports basically money for nothing, money to stay off someone else's turf or teaming up to impede competition might cross some lines depending on how the setup came about or works in practice.

I'd say neither Google nor Apple are sitting comfortably as this plays out. 

Google is sitting pretty in the end they will get access like Spotify for nothing, the gatekeepers as defined by the EU, should be cleared off of each others patch, for the sake of all the small to medium size developers it will never happen. 

Interestingly enough, there are 16 corporations in Europe that have market caps above $100B, with the first being Novo Nordisk at $452B, and ASML at third place and $259B.

The U.S. has something on the order of 60 corporations with market caps about $100B, Apple being the largest. 

I don't believe that Apple or Google is too concerned in the long term about the outcome of this, but Microsoft is hoping for a resurgence in Bing.

mikethemartian

So Apple claims that it doesn’t trade on user’s privacy but they push you towards a company that does and Apple takes a 36% cut.

chasm

mikethemartian said:

So Apple claims that it doesn’t trade on user’s privacy but they push you towards a company that does and Apple takes a 36% cut.

To be fair, Apple can only control what Apple does, and Google is in truth probably the best search engine — but at a very high cost to users.

If Apple had made a deal with MS to have Bing be the default, they probably would have demanded a similar commission rate — they’d just be earning a lot less.

It is the users who choose Google, not Apple, who should be making these commissions. If you’re selling your most private and personal data to Google, why aren’t YOU getting any money for that?

If you assume Apple has 100 million US Safari users between the its mobile and computer products, and lets say 80 million of them use the default search in Safari, I reckon that $26 billion would work out to about $325 per user per year.

Still not enough for me to switch from DuckDuckGo, but at least those who are actually giving their data away for no reward at all now would be getting SOME compensation …

davidw

mikethemartian said:

So Apple claims that it doesn’t trade on user’s privacy but they push you towards a company that does and Apple takes a 36% cut.

You keep making this silly argument.

Apple isn't providing Google with any of the personal data they use for targeted ads. Most of that data comes from Apple users freely choosing to use Google free services. Like Google Maps, GMail, YouTube, Google Docs, Google Cloud, Google Earth, etc and of course Google Search itself. Those popular Google free services are not limited to Android users, they are also available for iOS users and nearly all iOS users are using at least one of them. Should Apple ban those services on their devices, for the sake of protecting their users personal data? Should Apple ban Google search on Safari? You think Apple customers shouldn't have the free choice to use any of Google free services because of Apple claims of protecting users privacy?

What Apple is protecting is the personal data they have on their users. Apple, for the most part, is not trading on users privacy with the data that they collect. Apple can only give their customers the choice to limit what data others can collect, unless they outright ban other services from collecting users data.

>The agreement was lucrative for both sides, with Apple securing regular payments from the search giant. Google, meanwhile, benefited from being the search that most Safari users used, furthering its position in the search market and serving advertising to a larger audience. <

That is not correct. That is not how Google benefited from the deal. There's no way that Apple would or even could, prevent Safari users from using Google search. So most likely, even without this deal, Google audience would not diminish by much. Safari only have about 20% of the World market share. How many would still use Google Search, even if it weren't the default on Safari? So the ... "larger audience"..... would only be from the Safari users that don't care enough to change the default.

What Apple have created and have to offer, is access to their customer base that have been shown to have a lot of spending power. And this is proven by the fact that even though Safari only have 20% of the World market share (but 30% in the lucrative US market.), Safari search accounts for about 50% of Google ad revenue from mobile internet search. And it's the advertisers that wants to advertise to Apple customers, that are paying Google for well targeted ads on Safari. And Apple is getting a piece of that because of the customer base that they created and maintain with their ecosystem. Not because they sold out on their claim to protect its users privacy.

A shopping mall in Beverly Hills charges a lot more for rent than a shopping mall in Pasadena. And most mall leases includes a percentage of the annual gross revenue. This as an incentive for the mall owners find ways to not just attract more shoppers to the mall, but also more wealthy shoppers. Like having an Apple Store or high end designer brand stores in the mall.

https://www.nolo.com/legal-encyclopedia/clb-percentage-rent.html

 

dave2012

mikethemartian said:

So Apple claims that it doesn’t trade on user’s privacy but they push you towards a company that does and Apple takes a 36% cut.

Such a good point. Apple's options were:

1. Release their own search engine and make little money from Apple user's data.

2. Subcontract it out to Google, and make massive profits from Apple user's data and conceal the profits in their accounts.

davidw

chasm said:

mikethemartian said:

So Apple claims that it doesn’t trade on user’s privacy but they push you towards a company that does and Apple takes a 36% cut.

To be fair, Apple can only control what Apple does, and Google is in truth probably the best search engine — but at a very high cost to users.

If Apple had made a deal with MS to have Bing be the default, they probably would have demanded a similar commission rate — they’d just be earning a lot less.

It is the users who choose Google, not Apple, who should be making these commissions. If you’re selling your most private and personal data to Google, why aren’t YOU getting any money for that?

If you assume Apple has 100 million US Safari users between the its mobile and computer products, and lets say 80 million of them use the default search in Safari, I reckon that $26 billion would work out to about $325 per user per year.

Still not enough for me to switch from DuckDuckGo, but at least those who are actually giving their data away for no reward at all now would be getting SOME compensation …

But Google users are not "selling" their person data to Google. They agree to allow Google to collect their personal data, for free, (to use for certain purposes), in exchange for not having to pay for the Google services they are using. It's in the EULA of the free services that Google provides. (But to tell you the truth, I don't ever recall agreeing to an EULA  in order to use Google Search. But i know that I have to agree to an EULA when using Safari, FireFox and Chrome. So maybe it's buried in there somewhere.) 

eriamjh

wonkothesane said:

So, the usual 30/30 split 

App Store rules says Apple should get 70%, not 36%.  

How unfair!!

PauloSeraa

chasm said:

mikethemartian said:

So Apple claims that it doesn’t trade on user’s privacy but they push you towards a company that does and Apple takes a 36% cut.

To be fair, Apple can only control what Apple does, and Google is in truth probably the best search engine — but at a very high cost to users.

If Apple had made a deal with MS to have Bing be the default, they probably would have demanded a similar commission rate — they’d just be earning a lot less.

It is the users who choose Google, not Apple, who should be making these commissions. If you’re selling your most private and personal data to Google, why aren’t YOU getting any money for that?

If you assume Apple has 100 million US Safari users between the its mobile and computer products, and lets say 80 million of them use the default search in Safari, I reckon that $26 billion would work out to about $325 per user per year.

Still not enough for me to switch from DuckDuckGo, but at least those who are actually giving their data away for no reward at all now would be getting SOME compensation …

1. What is this imaginary "high cost" to the users? Self-righteous people on the internet love to doom about "collecting your data" but amazingly they can never point out any real-world harm that comes from it. That's largely because: there is none. You may have an argument somewhere in there about them profiting off of data and not sharing that profit with you, but then again, they could just charge you $325 a year to use Google instead...which absolutely no one would choose, except virtue-signaling internet personalities.

2. Apple has way more Safari users than that.

3. DuckDuckGo is cute, but completely inadequate and unusable for anything other than casual searches.

13485

mikethemartian said:

So Apple claims that it doesn’t trade on user’s privacy but they push you towards a company that does and Apple takes a 36% cut.

Huh. I must have been in a meeting on the day Apple "pushed" me to using Google, instead of  it being my choice. Please tell me when this happened.  

Honkers

13485 said:

mikethemartian said:

So Apple claims that it doesn’t trade on user’s privacy but they push you towards a company that does and Apple takes a 36% cut.

Huh. I must have been in a meeting on the day Apple "pushed" me to using Google, instead of  it being my choice. Please tell me when this happened.  

Making Google the default is a clear push.  The fact that you can push back doesn't mean it isn't a push.

tmay

Honkers said:

13485 said:

mikethemartian said:

So Apple claims that it doesn’t trade on user’s privacy but they push you towards a company that does and Apple takes a 36% cut.

Huh. I must have been in a meeting on the day Apple "pushed" me to using Google, instead of  it being my choice. Please tell me when this happened.  

Making Google the default is a clear push.  The fact that you can push back doesn't mean it isn't a push.

Uhm, no, not even. For most people, phones are appliances, and Google is noted for being the "best search engine". Whether that is true or not, "google it" is a thing for consumers.

Frankly, I'm a bit confused about why this is such a big deal.

Whatever replaces Google on the iPhone, and thank god that won't be Meta, is going to have to come up with similar economic means of sustainment, and that appears to be advertising and services. More competition isn't likely to improve the marketplace above and beyond Google Search, so expect that most consumers, given the choice, will pick Google.

avon b7

tmay said:

Honkers said:

13485 said:

mikethemartian said:

So Apple claims that it doesn’t trade on user’s privacy but they push you towards a company that does and Apple takes a 36% cut.

Huh. I must have been in a meeting on the day Apple "pushed" me to using Google, instead of  it being my choice. Please tell me when this happened.  

Making Google the default is a clear push.  The fact that you can push back doesn't mean it isn't a push.

Uhm, no, not even. For most people, phones are appliances, and Google is noted for being the "best search engine". Whether that is true or not, "google it" is a thing for consumers.

Frankly, I'm a bit confused about why this is such a big deal.

Whatever replaces Google on the iPhone, and thank god that won't be Meta, is going to have to come up with similar economic means of sustainment, and that appears to be advertising and services. More competition isn't likely to improve the marketplace above and beyond Google Search, so expect that most consumers, given the choice, will pick Google.

This all boils down to how things are interpreted. 

Has the Google/Apple deal stifled competition and perpetuated the situation? Is Apple being paid to not tread on Google's turf? Would things have evened out if the deal didn't exist? Is the deal a means to lock people into a duopoly that shares the spoils? Etc.

Default search option is a known key revenue driver. That is why Google is prepared to pay so much for it. 

If it were so sure of its superior product, it could surely do away with the 'default' arrangement and save those billions?

notrs

I know that there is a whole new regime and the Microsoft of today is not the Microsoft of the 90s, but I can’t help getting tickled at reading Microsoft complaining about the unfair advantage created from the power of defaults. 

Honkers

tmay said:

Honkers said:

13485 said:

mikethemartian said:

So Apple claims that it doesn’t trade on user’s privacy but they push you towards a company that does and Apple takes a 36% cut.

Huh. I must have been in a meeting on the day Apple "pushed" me to using Google, instead of  it being my choice. Please tell me when this happened.  

Making Google the default is a clear push.  The fact that you can push back doesn't mean it isn't a push.

Uhm, no, not even. For most people, phones are appliances, and Google is noted for being the "best search engine". Whether that is true or not, "google it" is a thing for consumers.

What has that got to do with anything?  Even if the customer still would have gravitated towards Google, given that there are alternatives Apple pushed them by making Google the default.  No question about it.  The default has power (why else would Google pay for it), it is a push.

davidw

Honkers said:

tmay said:

Honkers said:

13485 said:

mikethemartian said:

So Apple claims that it doesn’t trade on user’s privacy but they push you towards a company that does and Apple takes a 36% cut.

Huh. I must have been in a meeting on the day Apple "pushed" me to using Google, instead of  it being my choice. Please tell me when this happened.  

Making Google the default is a clear push.  The fact that you can push back doesn't mean it isn't a push.

Uhm, no, not even. For most people, phones are appliances, and Google is noted for being the "best search engine". Whether that is true or not, "google it" is a thing for consumers.

What has that got to do with anything?  Even if the customer still would have gravitated towards Google, given that there are alternatives Apple pushed them by making Google the default.  No question about it.  The default has power (why else would Google pay for it), it is a push.

NO

Apple is really only "pushing" the users that either don't know how to change the default search engine or don't care about which default search engine they use. Apple is not "pushing" the users that already wants to use Google search, into using Google search. Neither are they ""pushing" the users that wants to use DuckDuckGo, to use Google search. Users that wants to use Google search will use Google search, no matter what search engine is the default. So will users that wants to use DuckDuckGo, they will still use DuckDuckGo, no mater what the default is.

Apple would only be "pushing" users to use the Google search if they made it difficult or non-intuitive to switch the default or have it so that Safari runs better with Google search, than others search engines or if Google search was the only choice with Safari. Then one can say that Apple is "pushing" Google search by having it as the default. Much like what Microsoft did with IE, when it was the default browser on Windows. 

It is very easy to change the default now of days. Even on Windows, where Edge is the default browser on 70% of the World's computers but only have a market share of 8% on desktops. How is that possible, if Microsoft is "pushing" Edge" by making it the default on Windows. Microsoft can't "push" Windows users to use Edge, by making it the default, when 68% of Windows users wants to use Chrome. Microsoft isn't "pushing" anything, by making it the default.  

notrs

Even if Apple didn’t set a default and made users pick one at setup there would be people upset over whichever choice was listed at the top. 

You just can’t win and whiners gonna whine.