We all know that Google (Alphabet) and Apple are two direct competitors in the market of mobile operating systems. While Google has owned Android with a huge market share, Apple’s iOS always brings huge profits. However, behind this fierce competition is a tacit agreement between the two giants.
Google benefits greatly from tacit consent
In 2014, New York Times reported ad revenue from Google’s mobile platform reached $ 12 billion for the entire year, in which 75% came from advertising on iPhone and iPad, 3 times as much as ad revenue on Google’s Android platform.
At that time, nobody was clear how much Google paid Apple from this advertising revenue $ 9 billion on iOS. Thanks to Oracle’s lawsuit, the truth has been revealed until now.
Google paid $ 1 billion to Apple to be allowed to put its search engine on iOS and make money from advertising on this operating system.
However, Bloomberg quoted from an employee of Google, said Google had to accept a share of 34% of its advertising revenue to Apple. It is equivalent to the amount of $ 3 billion, meaning that Apple received a total of 4 billion dollars in 2014 from Google.
Thus, Google earned $ 9 billion on iOS, but only took a total of $ 5 billion. And yet, it is still more than $ 3 billion search advertising revenue on Android.
Apple is also very wise
Apple did not hesitate to allow its rival to put the search engine on operating system iOS. The reason is not only by the amount of 1 billion USD and advertising revenue sharing, but by actually Google’s search engine is too good for users.
Allowing customers to use search engines and several Google’s applications also does not affect the ecosystem and iOS apps. Besides, Apple not only cooperates with Google. While Google remains the default search engine, inside some other Apple apps that are not in agreement, still use other search engines like Microsoft’s Bing. Apple can still share advertising revenue with many other vendors.
The agreement bringing benefits can also be a trap
For business, killing opponents does not mean that you will benefit, but profitable cooperation is always a goal to be the new top priority. Apple and Samsung will not work together in providing components for the iPhone all of a sudden, while this is the two competitors in the smartphone market.
Therefore, there is nothing to be surprised if Apple and Google cooperate and share the revenue. And perhaps Google is also very pleased to be able to earn a lot of money from search ads on iOS.
But that is what can make Google increasingly dependent on iOS. It will be no good at all for the search giant that owns a separate platform operating system Android. This can be a trap invisible to Google, the deeper Google falls into, the more difficult to come out, especially when Apple will withdraw from the mobile advertising playing field and give all back to advertisers. Apple can also completely control Google by increasing ad-blocking apps. Just like Facebook can control the content publishers on social network.
Those dependent are always powerless and those who take control of the game can do anything. Thus, the big immediate advantage is not always good. Of course, a giant in search and advertising business as Google will hardly be defeated only because the advertising business on iOS, but it will have a huge impact on the general business situation of the company.
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