Apple's lucrative default search deal with Google under threat from antitrust lawsuit

Apple's lucrative deal with Alphabet subsidiary Google to make Google search the default in Safari faces an uncertain future due to a looming antitrust lawsuit from the US Department of Justice, reports The Information.

The partnership represents a financial boost for both companies. Apple is expected to make more than $20 billion in 2022 and account for 36% of advertising revenue from Safari searches. Meanwhile, if the lawsuit is unsuccessful, Google risks losing access to 70% of iPhone searches, which would have a significant impact on the company's $207 billion in mobile search advertising revenue in 2023.

Sensing the potential danger, Google has been aggressively steering iPhone users to its own apps, Google and Chrome. The company has invested in features like Lens image search and personalized content feeds, and has also run extensive ad campaigns highlighting the apps' unique features. But the results have been mixed: iPhone searches made via the Google app have only increased by 25% to low 30% over the past five years, according to The Information.

Google recently hired industry veteran Robby Stein to spearhead user acquisition for its iPhone app. He is exploring ways to leverage generative AI to make Google apps more appealing. Their goal is to double the number of Google searches outside of Safari, even as user growth for Google and Chrome apps has stagnated.

The change is crucial for Google to mitigate the potential blowback from litigation: an adverse ruling would not only affect Google's revenue, but also set a precedent for how regulators view Apple's default settings and competitive practices.

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MacDailyNews' take: oogle pays Apple tens of billions of dollars a year to be the default search engine in Safari because Mac, iPhone and iPad users are a much more attractive demographic (to a company hoping to make a profit) than those who would settle for an iPhone knockoff.

In September 2023, Horace Dediu of Asymco did the calculations and came to the conclusion that an Apple iPhone owner is 7.4 times more valuable than someone who settles for an Android smartphone.

Real iPhone vs. Poor Man's iPhone. Same as ever. MacDailyNews, April 22, 2022

Bottom line: People who settle for Android devices are not on par with iOS users. In fact, iOS users are far more valuable than Android users to developers, advertisers, third-party accessory manufacturers (speakers, cases, chargers, cables, etc.), car manufacturers, musicians, TV show producers, movie producers, book authors, carriers, retailers, podcasters, etc. The list goes on and on.

The quality of your customers matters. Very important.

A simplistic “analysis” that focuses only on market (unit) share and equates one Android user with one iOS user makes the fatal error of falsely equating users of each platform one-to-one.

When it comes to mobile operating systems, not all users are equal. – SteveJack, MacDailyNews, November 15, 2014

Android is generally recommended for users who:

a) they don’t see any reason why they should choose an iPhone over a poor quality knock-off and are therefore less likely to understand/research the device’s features or enter their credit card information into the device when making a purchase; and/or b) they are tempted by offers such as “buy one get one free” or “buy one get two or more free” (e.g. a $100 gift card with purchase).

Neither type of customer is the best when it comes to engagement success or coveted demographics. In fact, they are closer to the bottom than the top. Android is popular but has a poor demographic because of who and how Android devices are marketed to. The never ending BOGO promotions attract the cheapskates and pointless TV commercials about robots and drilling holes in concrete walls attract the musclemen and fools, not exactly the best demographic unless you are selling muscle building powders or grease monkey overalls.

Google made a huge mistake. They handed Android over to a “partner” who pushed and continues to push the product on the exact opposite type of user that Google needs for Android to be truly successful. As a result, Android became a backwater full of mediocre or even worse versions of apps that were only downloaded for free or with ads. But Android users are notoriously stingy, so ads are not very effective and they don't sell very well. People assumed Google would understand this, but they were wrong.

Google built a platform that relied heavily on ad support, but sold it to the types of customers least likely to use ads.

Developers focus on iOS users because they are the ones who buy apps. Accessory manufacturers focus on iOS users because they are the ones who buy products. Car manufacturers focus on iOS users because they have money and have a proven willingness to spend it. And so on. Android gets the Hee Haw demographic. Apple doesn't want or need that. It's too much hassle to be worth it. – MacDailyNews, November 26, 2012

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Sources 1/ https://Google.com/ 2/ https://macdailynews.com/2024/07/05/lucrative-apple-google-default-search-deal-threatened-by-antitrust-lawsuit/ The mention sources can contact us to remove/changing this article

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