Google pays Apple $20 billion annually to be Safari’s default search engine

Having access to Apple’s quality customers is very valuable. Google-parent Alphabet pays Apple as much as $20 billion to be the default search engine on Safari, a figure that has risen quickly over the last decade. Theses eye-popping annual payments show that Alphabet’s moat isn’t very deep, Jeremy Bowman writes for The Motley Fool.

Jeremy Bowman for The Motley Fool:

If you use Apple devices, you’re probably aware that Google is the default search engine on Apple’s Safari browser. When you search on an iPhone, Mac, or iPad, you’ll automatically be using Google unless you go out of your way to choose an alternative like Microsoft’s Bing, Yahoo, or DuckDuckGo.
Apple doesn’t do that because it believes that Google is the best search engine. It does it because Google pays handsomely for the privilege.
In 2022, Alphabet was estimated to pay Apple as much as $20 billion to be the search engine of choice on Safari.
The nature of Alphabet’s protection payments to Apple calls into question its claims to a moat. After all, if Google Search had its own innate competitive advantages, why would it need to pay Apple as much as $20 billion for preferential treatment in its search bar?
It seem[s] like Apple is really the one with the economic moat here. After all, Apple does virtually nothing to earn that $20 billion, which is essentially straight profit… By paying Apple so much money, it seems that the company doesn’t trust internet users to use Google when given a choice.

MacDailyNews Take: Of course, it’s all about demographics. Apple’s customers are the most coveted because, beyond taste, they have money and the proven will to spend it.
Why does Google pay Apple billions of dollars annually to be Safari’s default search engine? Because Apple has the best customers in the world and Google’s Android doesn’t. Google needs access to discerning people with means because they simply don’t have it with the great unwashed who settle for IP- and privacy-trampling iPhone knockoffs. – MacDailyNews, February 12, 2019

The bottom line: Those who settle for Android devices are not equal to iOS users. The fact is that iOS users are worth significantly more than Android settlers to developers, advertisers, third-party accessory makers (speakers, cases, chargers, cables, etc.), vehicle makers, musicians, TV show producers, movie producers, book authors, carriers, retailers, podcasters… The list goes on and on.
The quality of the customer matters. A lot.
Facile “analyses” that look only at market (unit) share, equating one Android settler to one iOS user, make a fatal error by incorrectly equating users of each platform one-to-one.
When it comes to mobile operating systems, all users are simply not equal. – SteveJack, MacDailyNews, November 15, 2014

Android is pushed to users who are, in general:
a) confused about why they should be choosing an iPhone over an inferior knockoff and therefore might be less prone to understand/explore their devices’ capabilities or trust their devices with credit card info for shopping; and/or
b) enticed with “Buy One Get One Free,” “Buy One, Get Two or More Free,” or similar ($100 Gift Cards with Purchase) offers.
Neither type of customer is the cream of the crop when it comes to successful engagement or coveted demographics; closer to the bottom of the barrel than the top, in fact. Android can be widespread and still demographically inferior precisely because of the way in which and to whom Android devices are marketed. Unending BOGO promos attract a seemingly unending stream of cheapskate freetards just as inane, pointless TV commercials about robots or blasting holes in concrete walls attract meatheads and dullards, not exactly the best demographics unless you’re peddling muscle building powders or grease monkey overalls.
Google made a crucial mistake: They gave away Android to “partners” who pushed and continue to push the product into the hands of the exact opposite type of user that Google needs for Android to truly thrive. Hence, Android is a backwater of second-rate, or worse, app versions that are only downloaded when free or ad-supported – but the Android user is notoriously cheap, so the ads don’t sell for much because they don’t work very well. You’d have guessed that Google would have understood this, but you’d have guessed wrong.
Google built a platform that depends heavily on advertising support, but sold it to the very type of customer who’s the least likely to patronize ads.
iOS users are the ones who buy apps, so developers focus on iOS users. iOS users buy products, so accessory makers focus on iOS users. iOS users have money and the proven will to spend it, so vehicle makers focus on iOS users. Etcetera. Android can have the Hee Haw demographic. Apple doesn’t want it or need it; it’s far more trouble than it’s worth. – MacDailyNews, November 26, 2012
Please help support MacDailyNews. Click or tap here to support our independent tech blog. Thank you!
Support MacDailyNews by shopping The Apple Store at Amazon.

The post Google pays Apple $20 billion annually to be Safari’s default search engine appeared first on MacDailyNews.