The tacit agreement helps Google firmly to the king of search: ‘tribute’ to Apple 20 billion USD/year, relieved to see the Meta ad engine collapsed

Apple and Google are fierce competitors. While Apple is the world’s most valuable company, Google controls Android – the dominant operating system in every way.

Some Google applications and services such as Google Search, Google Maps, Gmail, YouTube are gradually becoming an indispensable part of modern life, but few people know that Google has to pay a heavy price for Apple. to stay competitive, especially in the US market.

When searching for something on the Internet, most of us immediately “Google”. No one ever changed the default search engine to Bing or DuckDuckGo, and this is the driving force behind Google’s more than 90% market share in the global search market, according to StatCounter.

Whether you use an iPhone, Samsung or any other brand, all browsing is done through Google Search. It’s Google’s flagship product, and ads make up the bulk of total revenue.

Because of the same owner, it is understandable that Google Search appears by default on the Android operating system. However, this tool is also available on the Safari browser of iPhone, iPad and MacBook. Why is that?

In fact, Google has to pay Apple billions of dollars a year to maintain the default search engine on all Apple-branded devices. In 2020, the WSJ estimates this number to be about 8-12 billion USD. By 2021, Google has to pay partners nearly 15 billion USD and by 2022 it is 18-20 billion USD, according to Forbes.

Obviously, this is one of the biggest partnerships in the tech industry. Google is willing to pay huge sums to maintain its monopoly position in the search engine market.

Apple currently controls about 50% of the smartphone and tablet market in North America. If the default search engine was switched to Bing, Google would immediately lose hundreds of millions of users.

Of course, this corporation need not worry too much about that. Most people are not ‘free’ to change what is considered the default, so it is almost impossible for a search engine to change.

Apple doesn’t have a search engine of its own, but it can still take advantage of developments in AI. Along with chatbot craze like ChatGPT, Microsoft and Google are now integrating the technology to launch the next generation of search.

It’s unclear if Bing can beat Google, but according to Microsoft CEO Satya Nadella, the prospects are bright. Obviously, Microsoft’s sudden and aggressive ‘encroachment’ into AI caught Google off guard.

If people love Bing, Apple is more likely to take advantage of this opportunity and force Google to pay more royalties. Microsoft might also happily outbid Google and make Bing the default search engine on all Apple devices. In short, Apple still benefits no matter what.

In a way, this billion-dollar deal serves as a peace treaty between Apple and Google. If Apple continues to earn more royalties, it can step up investment in R&D and get more of its products into the hands of consumers.

Since the changes to Apple’s privacy policy in 2021, Google and Meta have faced many “headwinds”. Marketers fear recession, while ByteDance’s short-video app TikTok emerges as a new force in digital advertising. Many streaming services are also starting to accept ads.

Previously, a Meta representative said that Apple’s change in the way advertising works on iOS applications will make it difficult for app makers and advertisers to track user behavior, thereby pushing Facebook to stand out. at the risk of losing up to $10 billion in revenue by 2022.

Fortunately, Google was not greatly affected by this move, partly because of the billion-dollar hidden business, partly because the search advertising business, which depends on customer behavior rather than data collected from customers. applications and websites. The group’s share of digital advertising in the US will grow slightly to 28.8% in 2022, according to Insider Intelligence, but is expected to drop to 26.5% this year.

In an interview in October, the Google CEO said search engine-based advertising tends to perform well in challenging economic times. A representative of Meta confirmed that Apple’s new policy still had an impact on advertising revenue, but it tended to decrease much.

According to the WSJ, Google and Meta’s ad businesses are still growing, but data from Insider shows that the pace is significantly slower than the rest of the market. According to internal analyst Zachary Goldner, the erosion of market share is mainly due to the fact that brands have the opportunity to access more ad formats.

“ All marketers want a lot of options ,” says Mr. Goldner.

By: WSJ, MUO