The relationship between Apple and Google is one of the most fascinating in tech. These two tech giants are fierce competitors and represent both the top mobile platforms: Android and iOS. That’s at least what you might think. Steve Jobs, after all, famously told his biographer, Walter Isaacson, that he wanted to “destroy Android because it’s a stolen product.”
They also have very different philosophies when it comes to user data–with Apple preaching that it believes “privacy is a fundamental human right.” Google is, naturally, the largest data collector of users because it is the largest advertising platform in the world.
There’s always something missing. In exchange for Google becoming the default search option on iPhones, Apple receives a large amount of money. This is a very lucrative partnership for a few rivals.
In fact, it has been estimated in the past that Google pays Apple more than $10 billion a year for the privilege. Google wants to defend its status as the most popular mobile browser in the world, Safari. It is understandable. Google also understands what almost every tech company does: that no one changes the default option.
You could argue that the majority of iPhone users will use Google, so it seems logical for Apple to receive a commission. It makes business sense, considering that Apple gets nothing in return for Google becoming the default search engine.
Now, however, a research note says that payment is expected to increase to $15 billion in 2021. The company also anticipates that the payment will rise to $18 billion in 2022. Although Apple does not break down its sources of revenue from services, analysts agree that the Google deal represents the largest slice of Apple’s services revenue.
In the 10 years that Tim Cook has been CEO of Apple, he has made it the most valuable, and most profitable company, ever. This has been due to the company’s move towards services, particularly in recent years when iPhone growth has slowed. Services revenue has also exploded during that time.
The company actually reported an unprecedented high in services revenue for the quarter. Google’s $5 billion to $6 billion extra in this year’s services revenue probably helps.
It does, however. It is a good thing for Apple’s bottom line but it does not help its credibility. Apple’s Tim Cook has repeatedly emphasized its unwavering commitment to privacy, not only because it makes huge amounts of money, but also by building amazing products such as the iPhone, Mac, AirPods and AirPods. Apple’s profiting from Google search ads appears to contradict that promise.
Apple has made every effort to address this issue and stands out from the rest. Apple doesn’t gather user data to show “personalized advertisements” in its products. The company doesn’t keep track of what you do on third-party websites and apps.
It has even taken a public stance against efforts to weaken privacy, even when that means refusing to cooperate with the FBI over access to devices belonging to mass shooters. This has reinforced the belief that Apple is committed to privacy and most of its actions support that perception. The company has mostly evaded scrutiny regarding data protection.
It’s actually the reason the company faces so much pushback over its plan to detect child sexual abuse material in iCloud Photos using an on-device hash-matching technology. For a company that hangs up billboards that say “what happens on iPhone stays on iPhone, the idea that the company is “scanning” your photos and reporting on what it finds, defies that promise.
Apple could argue in this case that it is trying its best to protect privacy and achieve a noble goal, which is to reduce the spread of really terrible content. There is no argument for such a deal with Google. It’s not a noble cause. Apple funnels users to Google directly, where they can monetize searches for free.
Your willingness to say no to certain things can speak volumes about your beliefs as a company. You should not say yes to something you feel is harmful for users. You should not say yes to anything that goes against your core values, especially those you have used in building your brand.
We can all agree on the fact that $15 billion is quite a large sum. Apple makes money. It’s very, very successful at it. It’s just that I don’t think anyone believed Apple was going to place a price on privacy.
Publiated at Sun 29 August 2021, 08:02:17 +0000