Lawsuit proceedings reveal Google paid handsomely to be
default search option for iPhones and iPads and that company’s total revenue
from Android is just $31bn
Apple and Google are rivals. So why is Google the default
search engine for mobile Safari, which is the pre-installed web browser on
iPads and iPhones?
The answer, court documents revealed on Thursday, is simple:
money talks. And $1bn, the amount Google paid Apple in 2014 for the privilege
of default access to the hundreds of millions of iPhone users, talks very
loudly.
The information came to light as part of Google’s lawsuit with
Silicon Valley giant Oracle, which accuses the search firm of infringing on
Oracle’s patents for programming language Java in its Android operating system.
On top of the $1bn payment, which had been reported as a
rumour by TechCrunch in 2013 but not confirmed until now, Oracle’s lawyers also
revealed that Apple and Google shared a portion of the revenue Google received
from showing adverts to iOS users. According to Oracle, “at one point in time”
that share was 34% – although it wasn’t clear who got the larger end of that
deal.
The payments kept Google as the default search engine for
mobile Safari, allowing it to continue to cash in on iOS. And being the default
is important: when Apple switched from Google Maps to its own in-house team for
the default map app on iPhones in 2012, the new app was criticised for its
error-ridden maps.
Three years on, the default app was used three times as much
as Google’s own app, according to Apple. That’s millions of users who Google
can’t get data from or show adverts to.
Elsewhere in iOS, Apple is already detaching itself from
Google search: the default search engine on Siri is Microsoft’s Bing, and that
cannot be changed by the user.
Other figures released in court help reveal quite why Google
was so eager to pay Apple huge sums of money for access to its users. Google’s
Android operating system, the most popular in the world, has generated revenue
of $31bn and profit of $22bn in its lifetime.
For comparison, Apple generated $32.2bn revenue from the
iPhone in the fourth quarter of 2015 alone – a figure that doesn’t include its
income from the App Store and iAd platforms, each the most direct comparators
for Google’s Android revenue.
Google’s makes money from Android in two ways: it takes a
proportion of the sales of apps and media on the Google Play Store, and it
shows display advertising to Android users.
Apart from its own Nexus and Pixel-branded devices, it does
not receive any revenue from the sale of Android phones – in stark contrast to
Apple. That means that iOS users are almost as valuable to Google as Android
users, since the firm can still profit by showing them adverts, but doesn’t
have to expend the energy of developing a whole operating system for them.
Google was unhappy with the publication of the revenue
figures, however, telling Oracle and the court that they should never have been
made public. The company told a federal judge that Oracle’s lawyer improperly
disclosed “extremely sensitive information”, and asked for the court records to
be redacted and sealed.
“Google does not publicly allocate revenues or profits to
Android separate and apart from Google’s general business,” the company said in
the court filing. “That non-public financial data is highly sensitive, and
public disclosure could have significant negative effects on Google’s
business.”
