Google pays Apple 36% of the revenue it earns from searches in Safari

[jasode]

For those unaware of history, Google's "ad revenue share" deal with Apple is similar to the early "distribution deal" that ~2002 Google struck with America Online. The basic financial enticement is the same: use our search engine and we'll give you a cut of the ad revenue.

I've not yet seen a legal explanation of why the Apple ad revenue share deal is now "illegal" and yet the AOL deal wasn't. Somewhat similar deals also happen with tv networks where they sign exclusive "distribution deals" with sports leagues and they share the money they get from tv commercials (the ads). "Put your NFL Monday game or college basketball tournament on our tv network and you get some of our ad revenue."

I guess the difference now is that Google is really big. Ok. But is that really the only reason?

[halJordan]

It's not illegal to have these deals; it's not illegal to have a monopoly. It's illegal to use your monopoly to prevent others from successfully competing.

And again- no one has made the determination that it is illegal. The DOJ believes it's illegal, but the DOJ doesn't decide what's illegal. We're literally having the trial to figure it out.

So, you're relying on overly simplistic assumptions that are misleading you.

You can easily get the legal arguments, they're on Wikipedia, they're on the doj website, they're on the indictments. The information just needs you to go out and get it.

[burkaman]

I don't know the answer to your question, but the fact that the Google-AOL deal was never challenged doesn't mean it was legal. Plenty of illegal things are never challenged.

[jedberg]

> I've not yet seen a legal explanation of why the Apple ad revenue share deal is now "illegal" and yet the AOL deal wasn't.

Do you ever speed on the highway? Have you gotten a ticket for every time you did it? Just because you didn't get caught doesn't mean it's legal.

[lvzw]

Exclusive deals can present antitrust issues, but the kicker is that this isn't even an exclusive deal, it's a default deal! Users can still can still use other search engines on iOS devices.

[1vuio0pswjnm7]

"Somewhat similar deals also happen with tv networks where they sign exclusive "distribution deals" with sports leagues and they share the money they get from tv commercials (the ads)."

Except the networks pay the leagues to broadcast games. With so-called "tech" companies, this is reversed. Google is paying Apple and Samsung so that no other search engine gets to be the pre-installed default.

Sports leagues do not pay TV networks in order to prevent other leagues from doing deals with the networks. But Google pays hardware manufacturers to be the pre-instaled default and exclude other search engines.

[ksec]

>Ok. But is that really the only reason?

Sentiment shift. Moral Compass in Silicon Valley ( or more like in the Tech Sector ), Smartphone Revolution and 15 years of zero interest rate.

None of the reported are really "news" apart from the precise 36% figure which is higher than most of our initial estimate. "Customer acquisition cost" isn't new. On a similar note Google also share their Ad revenue with Mozilla / Firefox.

We might not like a lot of what's going on with Google or Apple. But I dont think revenue share is in anyway wrong or illegal.

[meiraleal]

> I guess the difference now is that Google is really big. Ok. But is that really the only reason?

So as you are insinuating things why not be clear and name it? What is it, corruption? Or do you think that the fact that AOL deal wasn't considered illegal, no deal ever will be and Apple/Google are free to do as they please? Your idea of justice is quite weird.

[r00fus]

From Google's point of view - this is a worthwhile origination fee. If you lose the entire "default" iOS population, you could lose a generation of minds in a key market (US mobile users).

The more people dissociate "search" with "google it", the less Google makes on their larger non-iOS search revenue.

[doctorpangloss]

The ad ecosystem is pretty complex. While you and I have opinions about it, and Google's business model, the problem with the DoJ is: it does NOT have opinions about advertising. It doesn't seem to have a coherent grip on the WHY behind this stuff at all, it seems to forget that courts legislate all the time, that opinions matter.

Maybe instead of courtroom antics and bullshit about making Google look bad; and maybe instead of narrowly focusing on the case law and quote enquote winnable that's-how-the-law-works arguments... they should go and pitch a persuasive opinion on why any of this shit matters. Because they're leaving an intellectual vacuum to be filled by fucking podcasters, all but guaranteeing the DoJ will lose.

[Mrirazak1]

I’m not surprised. But my question is isn’t this antithetical to the whole privacy stance? We don’t sell your data but we do allow companies to bargain you as a user for their products.

[classified]

It's part of Apple's strategy. "If you want access to our users, you have to go through us".

[chakintosh]

Apple's Safari has built in anti-tracking tools. Apple's stance is still "we're not selling YOUR data", but they do allow your data to be anonymously shared and not point to you.

[wmf]

Am I the only one who thinks 36% customer acquisition cost is not crazy?

[xnx]

Definitely not the only one. Both Google and Apple (and their very highly paid economists, analysts, and CXOs) are betting that this deal is more beneficial to them than the alternatives.

[AuthError]

it's not customer acquisition though, Google can most likely get lot of users off safari to chrome for cheaper but issue would be that Apple would then get incentive to build search (and like apple maps, they can just embed it into everything without option to change default)

disclaimer: Googler here(not in search PA), this is my personal opinion.

[bradgessler]

It’s only 6% crazier than the 30% cut Apple gets from developers selling their apps through the App Store.

[spiderfarmer]

I think it is crazy. Lots of businesses would be destroyed if it was that high.

[rahimnathwani]

Not all of those users are incremental, though. If your iPhone came with Bing as the default search provider, would you just leave it like that?

[cm277]

Only if you consider CAC on a per-query basis, against top-line revenue, in perpetuity. There's a word for this and it's not CAC, it's tax. And that's what this is, it's a tax on advertisers due to Google's monopoly power. How do we know they have monopoly power? because they can afford to give 36% of top-line revenue in perpetuity to another party and still make money. This implies >80% gross margins, which let's face it, scream monopoly power.

[pravus]

Maybe it's just me and my bad attitude toward products today but this could explain why everything seems to be turning into low-quality garbage. I'm not a millionaire business man so I must be doing it wrong, but spending over 1/3rd of your revenue stream on customer acquisition rather than anything product-related seems like a bargain I don't want as a consumer.

[YetAnotherNick]

It's 36% of revenue not even profit. Why would Google do such a deal?

[mpalczewski]

I've always had the sense that Google was really bad at negotiating.

[repelsteeltje]

Close enough to the regular 30% Apple tax. Plus a 6% cherry on top — because Google has enough to spend; especially since search is their core business.

[majani]

They're making money hand over fist right now, and they still have startup-esque growth rates, so they don't need to be tough negotiators. When Google's revenue and growth flattens, you'll see the toughness come in

[jakobson14]

It's not a negotiation. It's google paying whatever sky-high sum apple demands, because google and their shitty search engine are toast the moment it's no longer the default.

[modeless]

And in court. It wouldn't be surprising to me if they lost to Epic after Apple won, despite actually already allowing sideloading and alternative app stores.

[msoad]

iPhone users won’t change anything if their “googling” experience is not powered by Google

[sdwr]

Goes along with the "don't be evil" mantra. They started as pure tech and found a money geyser, no reason to upset the applecart when they're already making out like bandits.

[warner25]

If not for this deal, what would be the default search engine in Safari? I feel like most normal people (not HN weirdos) would be angry if their browser defaulted to something other than Google when they tried to "Google something." Isn't this part of what so many people have complained about with Edge and Bing?

[gilgoomesh]

I don't think those same "normal" people would notice if they "Google something" and the result page had a DuckDuckGo icon in the top-left.

[thirtyseven]

I assume that both parties have market research showing that enough people (maybe even 36%) don't care enough to figure out how to change the search engine or buy a different phone.

[guessbest]

I use brave search and usually end up clicking on the google button midway down on the page. Every search engine is inferior and if google wasn't the default search on iOS it would hurt the brand, especially since google is the default search on android. I'm a little older and using bing just feels like altavista in the 90's. Its good enough, but it feels like its selling me something I don't want. Just give me a good search result or I'll have to stop using the phone's web browser to look things up (or manually change the browser search engine with every release).

[LastTrain]

Seems like a decent incentive for them to continue investing in Android

[majani]

Owning an operating system is the most powerful position in all of software. That's incentive enough

[isodev]

Why? They already have all users on Android with Google search by default.

[filipeherculano]

this makes me wonder if the "Here's what I found on the web." from Siri is intentional and not due lack of ability to parse and provide an appropriate response.

[Tao3300]

Is that what they pay Mozilla too? I know that that deal is one of the things keeping the lights on for them.

[umeshunni]

Does anyone who if they minutes from the trial are publicly posted anywhere?

Someone had posted this link earlier: https://www.courtlistener.com/docket/18552824/772/1/united-s...

but it doesn't have minutes.

[cyclecount]

The biggest potential outcome of this trial is that the Google-Apple deal is deemed illegal and maybe that forces Apple to buy or build their own search engine. There is clearly no real competition in search, and just because Google’s stagnant product is currently the “best” doesn’t excuse the ways in which it continues to degrade in quality and become more user-hostile.

[paweladamczuk]

https://archive.li/h9tHz

[yalogin]

It’s inline with the 30% fee apple takes for their App Store. Search from iOS is probably more valuable and a lot lot higher volume than any app. Essentially search is “installed” and used on all iOS devices in the world. So 36% seems ok

[niksmac]

Every time I hear “Google pays” it makes me feel good.

[pantulis]

And... where does the remaining 64% come from?

[Animats]

It's amazing how much Google is paying for traffic. The alternatives to Google are not that great. They're terrified of competition.

[robblbobbl]

Interesting read