Report: Google Pays $700M to Apple for Prominent Mobile Search Placement
February 11, 2013 2:48 PM
Apple, Microsoft, and Adobe also gets grilled about high prices by Australian regulators
According to Morgan Stanley (
) analyst Scott Devitt, Google Inc. (
) paid about $700M USD to Apple, Inc. (
) in 2012 to solidify its
monopoly on mobile search traffic
I. The Price of Search Hegemony
continues to shift
towards a more mobile profile, Google -- a company driven by search-related advertising profits -- has moved aggressively to be the king of mobile. By offering its Android operating system "free" to partners Google has established a dominant position in unit sales. And by extending an olive branch to Apple -- the second place player in the market -- Google is ensuring that if a customer uses the default search on their smartphone, they'll probably use Google's mobile landing page.
Google pays an estimated $3.20 USD per iOS device sold to be the default search provider, according to Mr. Devitt's math. That deal grossly eclipses Google's lucrative deal with the Mozilla Foundation, which Mr. Devitt estimates paid $200M USD.
Google pays an estimated $3.20 USD per Apple device to be the default search engine.
[Image Source: Android Headlines]
On the desktop front, many users manually navigate to Google. Additionally, Google's Chrome browser is currently in third place, while Firefox is narrowly ahead in second place in most usage statistics. Both browsers have Google as the default search engine. Overall the two browsers account for about a third of internet traffic
Net Applications, while Microsoft Corp.'s (
) Internet Explorer (IE) hangs on to half of traffic. The default search page in IE
(or the Bing-powered MSN), Microsoft's own in-house solution.
Mr. Devitt estimates that by 2019, IE will have bled more market share to Chrome and Mozilla, and Google will have greater control of the market. However, he also believes that control will cost Google $500M USD in traffic acquisition costs (TAC) to Mozilla.
He also estimates by 2019 Google will be paying Apple $2.3B USD in TAC for iOS, as he expects unit sales of iPads, iPhones, and iPod Touches to soar to half a billion devices a year by 2019.
$10.75B USD for fiscal 2012
; by contrast Apple
made $13B USD
in Q4 2012, alone.
Google's dominant position in mobile and desktop search has drawn scrutiny. Google recently agreed to make certain changes in the U.S. to placate the
U.S. Federal Trade Commission
(FTC), but Microsoft and others claim the FTC let Google off too easy. In Europe Google is looking to settle a similar antitrust spat with more extensive promises and fairness guarantees.
II. Australia Targets Apple With Harsh Words, Parliamentary Probe
In related news, Australia's Parliament is looking to grill Apple, Microsoft, Adobe Systems, Inc. (
), and others over claims that they're overpricing products for the Australian market.
The Australian dollar is generally relatively "strong", which should mean that products there should be more affordable. But Australians are finding that Apple and others are charging similar rates in dollars to other countries, making the Australian products much more expensive, effectively.
Labor government MP Ed Husic, who helped set up the hearing and whose party currently is the second largest in the national government remarked to
, "In what's probably the first time anywhere in the world, these IT firms are now being summoned by the Australian parliament to explain why they price their products so much higher in Australia compared to the United States."
An iPhone on sale at the Sydney, Australia Apple Store; Apple is among the U.S. companies accused of price inflation and tax evasion in the land down under [Image Source: Reuters]
Australia's Labor Party has been dented by the rising cost of living and looks to leverage the hearing to its advantage before the Sept. 14 elections.
A 16 GB iPad (Wi-Fi) commands A$539 ($553.60), almost $55 more than its U.S. cost ($499 USD).
So far Microsoft and Adobe have submitted written statements, while Apple has ignored the Parliamentary complaints altogether. Microsoft and Adobe have defended their pricing saying that there's an inherent cost to imports and that Australia has a higher cost of labor than other markets.
MP Husic is not amused, commenting, "The companies have blamed each other for not appearing. One will say 'we're not going to appear if the other is not going to appear'. So we've cut straight to the chase and said we'll just summons you."
This time if the companies don't send executives to the hearing, they could face contempt of parliament charges, fines or even jail terms. MP Husic takes particularly hard aim at Apple, who he effectively accuses of tax fraud. He comments, "Ask anyone who has sought answers from them about their Australian operations and you will hear a common theme. They will not talk."
"While they generated A$6 billion in revenue, they apparently racked up from what I understand A$5.5 billion in costs. How? They do not manufacture here. They have no factories here."
But it looks like Apple will be forced to finally talk and explain both the high pricing and why it only paid $40M USD in taxes in the lucrative market.
faced similar complaints of tax evasion
in the United Kingdom, another of its top markets.)
"We can't expect users to use common sense. That would eliminate the need for all sorts of legislation, committees, oversight and lawyers." -- Christopher Jennings
IPad Market Share Falls Slightly, Microsoft Surface Sales Weak
January 31, 2013, 1:03 PM
Apple Earnings Worry Investors; Stock Falls 10 Percent
January 23, 2013, 7:06 PM
Inadvertently Leaked Earnings Report Leads to Shaky Trading Day for Google
October 18, 2012, 7:08 PM
Microsoft Loses $6.2B USD on Internet Advertising Bet
July 3, 2012, 6:54 PM
Apple Makes $9.5B USD in Britain, Pays Only 0.16% in Taxes; Google Also Targeted
April 10, 2012, 5:46 PM
What is Flagship Sony’s XperiaX Smartphone?
October 25, 2016, 5:00 AM
The Galaxy C9 Pro Samsung Smartphone Has 6GB RAM
October 24, 2016, 4:29 AM
The Unlocked Moto Z Play Launches for $449.99 Today.
October 22, 2016, 5:00 AM
Nintendo Announced Next Game Machine to be Portable “handheld”.
October 21, 2016, 5:00 AM
Do you hate to do yard work?
October 20, 2016, 5:00 AM
Smart Technology Mood Collar To Understand Your Dog’s Emotions
October 17, 2016, 5:00 AM
Most Popular Articles
Car Insurance - The Hidden Discriminatory Practise
October 18, 2016, 5:00 AM
Cyber Hackers Threaten Security of Lifesaving Medical Devices
October 19, 2016, 8:09 AM
8 Days to Apple's October Event
October 19, 2016, 8:22 AM
Is Razer Blade Stealth Laptop For You?
October 16, 2016, 5:00 AM
Tesla Announces Level 5 Autonomous Driving
October 19, 2016, 8:30 PM
Latest Blog Posts
Medical Council of India Makes Generic Medicines Mandatory
Oct 25, 2016, 5:00 AM
MacBoo Pro 2016: Release date Oct. 27
Oct 24, 2016, 7:16 AM
Mac Users, Try this if Your Mac is Infected?
Oct 23, 2016, 7:00 AM
Tips to Prevent Smartphones From Overheating:
Oct 22, 2016, 5:00 AM
Nasa Flies Drones at Nevada Airport
Oct 21, 2016, 8:21 AM
T-Mobile Data Problems
Oct 20, 2016, 10:17 AM
Annoying Apple Watch Problems and How to Fix Them
Oct 20, 2016, 5:00 AM
Your Mail May Soon Be Delivered By Robot
Oct 19, 2016, 9:34 AM
2018 Jeep Wrangler Prototype Sells At Junkyard
Oct 18, 2016, 5:00 AM
Samsung Shines with Gold Edition Tablet
Oct 17, 2016, 9:24 AM
Tesla Hints Mysterious Product Debut for October 17th
Oct 16, 2016, 10:14 AM
Samsung Galaxy Note 7 Phones on US flights
Oct 15, 2016, 5:00 AM
Comcast Fined $2.3 Million For Unconfirmed Services Charged To Customers
Oct 14, 2016, 5:00 AM
“American singer / songwriter “Bob Dylan is awarded 2016 Nobel Prize in Literature.
Oct 13, 2016, 10:33 AM
Battery Defect in Medical Device
Oct 12, 2016, 5:00 AM
IBM Bolsters Social Services Sector With Technology Grants
Oct 11, 2016, 5:00 AM
Scientists Sound Alarm on Climate but US Still Toys With Skepticism
Oct 10, 2016, 5:00 AM
More Blog Posts
Copyright 2016 DailyTech LLC. -
Terms, Conditions & Privacy Information