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Google Paid $7.2 Billion Last Year To Partners, Including Apple, To Prominently Showcase Its Search Engine and Apps on Smartphones (bloomberg.com)
A reader shares a Bloomberg report: There's a $19 billion black box inside Google. That's the yearly amount Google pays to companies that help generate its advertising sales, from the websites lined with Google-served ads to Apple and others that plant Google's search box or apps in prominent spots. Investors are obsessed with this money, called traffic acquisition costs, and they're particularly worried about the growing slice of those payments going to Apple and Google's Android allies. That chunk of fees now amounts to 11 percent of revenue for Google's internet properties. The figure was 7 percent in 2012. These Google traffic fees are the result of contractual arrangements parent company Alphabet makes to ensure its dominance. The company pays Apple to make Google the built-in option for web searches on Apple's Safari browsers for Mac computers, iPhones and other places. Google also pays companies that make Android smartphones and the phone companies that sell those phones to make sure its search box is front and center and to ensure its apps such as YouTube and Chrome are included in smartphones. In the last year, Google has paid these partners $7.2 billion, more than three times the comparable cost in 2012.
... and very informative, but not earth-shattering.
Sounds like a good business model for all concerned, except Google competitors.
Those companies could pony up if they think there's a decent ROI.
It little behooves the best of us to comment on the rest of us.
More money flowing out of Google (which receives advertiser revenue) and into device/content providers (the ones that actually provide the things we want). I can understand how Google investors are getting worried about tightening profit margins, but how is this not a high-five for consumers?
I'm not a fan of Google but how is this abuse of dominance? The smartphone makers/partners weren't coerced or forced to make Google their default search engine - they did so willingly in exchange for compensation. How is this any different than Norton paying computer makers to preload their software?
It's a bit borderline. You can't afford to pay Apple $2bn to be the default search engine unless you're already a huge company, and it's hard to grow to being a huge search engine company if someone else is the default on all of the popular platforms. It's not completely clear whether this extends beyond the normal sort of barrier to entry for an established market or whether it's prohibitive to new entrants (which would mean that you no longer have a functioning market).
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The more money Google spends on this sort of thing, the less they'll have available to spend on doing their evil stuff.
Actually if Google has to pay out billions just to keep Apple from going to Bing, I'd say it's pretty decisive evidence AGAINST market dominance. Market dominating companies don't have to bribe retailers for shelf space.
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Hey whatca doing there? Using balanced reasoning? That isn't the Slashdot way. Companies must not make any money at all, All services need to be free open source, collect no information about you, be easy enough for any slob to use it and have no advertisements. These companies must also pay all the people who work there a fair salary for their location, and treat everyone like a god. And they better not take in any money from the government, because if that was the case, then they are obviously dealing with some shady activity.
Companies pay Google for advertising. The reason they pay them is because they get the views. Google gets the views because they offer services to end users that they find useful. Google is a for profit company... Even if it were a not for profit, they would need to bring in nearly the same amount of revenue to keep the organization running.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
Also the seller would probably prefer Google, so the others would have to outbid them by more than little bit.
Wealthy companies are paying wealthy companies a lot of money, in a mutual beneficial way. Because we are suppose to hate capitalism, so we must be outraged.
However how is this hurting the customer? It is a bit annoying if I wanted a different search engine by default, but for the most part it is easy to change, they are not even paying to have Google as the only option, just the default one. 72 billion to set a default flag to 1.
A few years ago Yahoo was the default search engine on my phone... I didn't like Yahoo and switched to Google... I didn't loose any sleep from it.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.