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Apple Demands $9 Billion From Google For Default Search On iOS (neowin.net)

A new report from Goldman Sachs analyst Rod Hall suggests that Apple may be demanding $9 billion from Google to have its search engine as the default in Safari on iOS. This is a steep increase to last year's estimated $3 billion licensing costs and $1 billion licensing costs in 2014. Hall suggests that Apple may even increase the costs to $12 billion in 2019. Neowin reports: It's unclear if Google's supplanting Microsoft as the default search provider for Siri and Spotlight last year is responsible for the purported price hike from Apple, though it may, at least partially, explain the sudden jump. The other explanation could be that previous estimates of the value of the agreement between the two tech giants were undervalued, given that apart from the $1 billion figure from 2014, we don't really have any hard evidence pertaining to the actual sum of these payments. Hall does indicate that "Apple is one of the biggest channels of traffic acquisition for Google' and despite the high cost, it is quite likely that Google will agree to pay the increased sum."

66 of 122 comments (clear)

  1. How many mac users are there? by Hognoxious · · Score: 1

    If anyone knows how many mac users there are we could divide it into 9 Billion and see whether the answer seems like a reasonable amount for Google to make from advertising.

    --
    Confucius say, "Find worm in apple - bad. Find half a worm - worse."
    1. Re: How many mac users are there? by saloomy · · Score: 2, Funny

      Safari also runs on iOS. There are like literally a billion of the most highly prized users on earth on that platform.

    2. Re:How many mac users are there? by Anonymous Coward · · Score: 1

      Since the title of the summary literally say "[...]On iOS", I don't see the relevance of your argument.

      Or have we come so far on ./ that we not only no longer read the article, nor the summary but not even the title? Wow, I wonder what the next step will be, not visiting ./ before posting? /s

    3. Re:How many mac users are there? by AHuxley · · Score: 2

      The move to any other search product, service would be an impressive branding win if that default search change was made.
      What is it really worth not letting another search service get that bounce?

      --
      Domestic spying is now "Benign Information Gathering"
    4. Re:How many mac users are there? by hcs_$reboot · · Score: 2

      If anyone knows how many mac users there are

      uh... it's Safari on iOS, meaning Apple mobile devices.

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    5. Re:How many mac users are there? by Anonymous Coward · · Score: 1

      He wanted to be first post, he only had time to read half of the headline.

    6. Re: How many mac users are there? by teg · · Score: 5, Informative

      Total iPhone units sold between 2007 and 2017 worldwide is 216.76 million. So not literally a billion; in fact, the article is specifically about iOS, so we can leave out macs. An iPhone will stay in use for about 5 years so let's assume that half of those 216 million devices is still using Safari and will get the search provider pushed. That's 9 billion for 100 million users, or USD 90 per IOS user. Assume I made a mistake and it would only amount to a third of that per user. I would still be worried if Google would pay my phone manufacturer that for providing me ads.

      Total iPhones sold in fiscal year 2017 were 217 million. In February 2017, Apple had 1.3 billion active devices, so 7 USD/user.

    7. Re:How many mac users are there? by Hognoxious · · Score: 3, Funny

      Fair point. I use "mac users" as it's a lot quicker to type than "pretentious hipster pansies".

      --
      Confucius say, "Find worm in apple - bad. Find half a worm - worse."
    8. Re: How many mac users are there? by Anonymous Coward · · Score: 4, Funny

      Username checks out

    9. Re:How many mac users are there? by AmiMoJo · · Score: 1

      Who would they go to anyway? Bing?

      Let then try. See how that goes down with the users. Wait for the flood of "charge your search engine to Google" apps.

      --
      const int one = 65536; (Silvermoon, Texture.cs)
      SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
    10. Re: How many mac users are there? by Daneel+Olivaw+R.+ · · Score: 1

      active devices =\= iphones. You should probably exclude the users in china (Pretty sure that that number is significant) and even after that, you are telling me that 1/7 people in the world use an iphone? Also, thought USP for apple was that it cared about your privacy, whatever happened to that?

    11. Re:How many mac users are there? by AHuxley · · Score: 1

      Thats what is so neat about capitalism and allowing free market competition. Another really great search service can grow.
      Not just one ad company offering their deranked search product to move more ads.

      --
      Domestic spying is now "Benign Information Gathering"
    12. Re: How many mac users are there? by Anonymous Coward · · Score: 1

      Also, thought USP for apple was that it cared about your privacy, whatever happened to that?

      Apple do care about my privacy. They just care about their profits even more. They're a very caring company and have lots of care to go around.

    13. Re: How many mac users are there? by sg_oneill · · Score: 2

      Right. Lets for the sake of not having this argument go for a figure thats about half of that (I'm being generous to the "devices in china" argument.), we're still at about 750 million. The claim about "only half" uses safari kind of suggests a non iphone user. Everyone uses safari on their phone. Or at least almost everybody. There really isn't much in the way of alternatives.

      Now, theres an estimate that google makes about $10 per user in profit per year ( https://www.forbes.com/sites/t... )

      By my reckoning that'd make $7.5 bil the break-even figure.

      The price being asked by apple here is a bit steep! I can certainly understand their imperative here, but it seems like Google would have a good case to say its not worth the price, especially with Apple blocking all of googles tracking bullshit.

      --
      Excuse the Unicode crap in my posts. That's an apostrophe, and slashdot is busted.
    14. Re:How many mac users are there? by Tough+Love · · Score: 1

      Thats what is so neat about capitalism and allowing free market competition. Another really great search service can grow.

      Yah, no. Not in this universe. Google owns that monopoly and it isn't going to change any time soon. Nothing short of massive government intervention can change it, and such is nowhere on the horizon. Not that it would be a bad thing, but let's be real.

      --
      When all you have is a hammer, every problem starts to look like a thumb.
    15. Re:How many mac users are there? by Anonymous Coward · · Score: 1

      I use a Mac and an iPhone, even though I hate Apple. Why? Because I hate Google (Android) and Microsoft (Windows) even more.

      Yes, there's a lot of hipsters that use Apple stuff as fashion accessories, but not all of us. It's just the least bad alternative for our use cases.

    16. Re: How many mac users are there? by Tough+Love · · Score: 1

      I just crunched the numbers and decided that Google has more to gain by letting Apple suicide itself than by paying the extortion.

      --
      When all you have is a hammer, every problem starts to look like a thumb.
    17. Re: How many mac users are there? by mysidia · · Score: 2

      Google's paying at most approximately $10 per user for a default setting that most users will probably use for the lifetime of the device.

      On the other hand, Frankly: MANY of these users are Google users before they are Apple users, and they WANT and EXPECT the default search to be a Google search for effective search results, not a search on a substandard service such as Excite, Yahoo, Jeeves, InfoSeek, Bing, etc.
      Perhaps Google should be charging Apple a licensing fee of about $20 per device for the privilege of using their search engine with a built-in addressbar lookup feature on iOS.

      An iPhone will stay in use for about 5 years

      Wtf you smoking? I've been using my same iPhone for 8 years.
      Even when people are done with it, they may sell their old one used, and other people buy used.

      so let's assume that half of those 216 million devices is still using Safari

      Apple is not paying Google for NEW iPhones.... The charge is for essentially All iOS Users. Even if its only 216 million phones for 5 years; Your assumption leads to = 216 million phones/year X 5 years is still more than 1 Billion phones, and the number of new phones sold every year has been more than the number of old phones that are replaced or stop being used every year throughout the life of the product ----- the number of devices is already more than 1 Billion and not decreasing.

    18. Re: How many mac users are there? by mysidia · · Score: 1

      active devices =\= iphones.

      You're being ridiculous there with the hair splitting. 1.3 Billion devices, more than 96% of which are iPads and iPhones, about 4% of which are Macs, almost all of which are affected by the outcome of the Safari deal with Google --- sure a couple million Chinese devices may be an exception.

      So what.... 1.0 billion affected devices versus 1.3 billion.

    19. Re: How many mac users are there? by tlhIngan · · Score: 1

      Also, thought USP for apple was that it cared about your privacy, whatever happened to that?

      Well, all it is the default search engine used for the iOS browser. For that, Apple realizes the only real solution is Google for many reasons - it practically is the only search engine out there. After all look at how many Bing jokes there are everytime search engines are brought up.

      So Google pays Apple a huge lump of money every year to be the default search engine - you can choose to have Bing or DuckDuckGo as well in the options. And Apple realizes that iOS users are typically more valuable to advertisers than Android or other platform users are. Enough so that every time Apple does something privacy related, it sends chills down advertisers spines.

      Google knows this too - and they also know that if the default went to Bing, that'll send a huge amount of valuable traffic to Microsoft. Even if half the users switched it back manually that's still a large chunk.

      And it's also a case of usability and practicality versus privacy - people Google for stuff, forcing them to use Apple Search (if it existed) would just be a lousy experience overall (or say, if they used Bing), so Apple pretty much has to relent on this point. If Google doesn't want to pay up, they'll approach Microsoft, and if not, they'll probably ask if DuckDuckGo and handle the potential traffic and make that the default. And Google wouldn't want that - exposing people to DuckDuckGo would be bad for Google. You get just as good results as Google, after all. But now the layman now knows about them.

    20. Re: How many mac users are there? by supremebob · · Score: 2

      You have a point there. I was an Android user before I was an iOS user, and one of the reasons I made the switch is because I could use most of the Google services I was accustomed to on my iOS device.

      If Apple starts shooting my search requests over to Bing (and let's face it, Microsoft is the only other company with a search engine would would be willing to write Apple a ten digit check), because of a licensing spat, that's going to become one less reason I'll be willing to get a shiny new iPhone once they come out.

    21. Re:How many mac users are there? by Rob+Y. · · Score: 1

      What's "free market" about providing a platform that allows for 3rd party apps - except browsers and certain other apps that Apple doesn't want you to provide - apparently because they can use their iOS browser monopoly to extort billions from Google? I believe the default search engine and browser on Windows are still Bing and IE (or Edge). But at least they allow you to install Chrome there - which, for the typical user, is probably easier than figuring out how to change the default search engine.

      --
      Posted from my Android phone. Oh, I can change this? There, that's better...
    22. Re: How many mac users are there? by TheFakeTimCook · · Score: 1

      Total iPhone units sold between 2007 and 2017 worldwide is 216.76 million. So not literally a billion; in fact, the article is specifically about iOS, so we can leave out macs. An iPhone will stay in use for about 5 years so let's assume that half of those 216 million devices is still using Safari and will get the search provider pushed. That's 9 billion for 100 million users, or USD 90 per IOS user. Assume I made a mistake and it would only amount to a third of that per user. I would still be worried if Google would pay my phone manufacturer that for providing me ads.

      So we then have to multiply the number of active iOS users by the number of web searches they do on average, since each search give Google another "impression" of their advertising, not to mention another bolus of user data to mine. So, if those 100 million (your estimate) active iOS users do an average of 1,000 Google searches per year (which is only about 3 searches per user per day), that's a cool 100 BILLION searches per year. So, that works out to $.09 per ad impression/data mining opportunity.

      Sounds quite reasonable to me.

      And if you add the number of active Mac users and their searches, the total cost per data mining opportunity/ad impression is lowered even further.

    23. Re: How many mac users are there? by guruevi · · Score: 1

      There were about 1B Apple OS devices active in 2016 and that has only exploded in places like China and India.

      That's less than $9/year per user. Given Google sells clicks at an average of $1-2 (up to $50 for the most expensive keywords) that's a pretty good deal.

      --
      Custom electronics and digital signage for your business: www.evcircuits.com
    24. Re: How many mac users are there? by commodore64_love · · Score: 4, Interesting

      Do you realize how dangerous it is to put ALL your information into Google's hands? All it takes is a simple "request for information" request by the government (U.S. or EU or China), and Google hands-over everything they know about you. Which you conveniently provided them.

      I prefer to divide my usage across multiple companies, so no one place has my entire browsing history.

      --
      "I disapprove of what you say, but I will defend to the death your right to say it." - historian Evelyn Beatrice Hall
    25. Re: How many mac users are there? by kriston · · Score: 1

      I don't agree that Bing is a "substandard service." Bing gives me far more relevant results than Google on many topics, including computing, DevOps, audio/video, and current events.

      --

      Kriston

  2. No ta, apple? by Anonymous Coward · · Score: 1

    Jacking the price up like that, just because, is taking the p*ss surely.

    It's really a balance on whether or not google needs that traffic anymore, or apple wants to make up with the lacklustre services of microsoft search on their flagship products.

    One is a search engine that works really well with a decent open phone OS to boot that lets modders do what they want. The other is a bag of shit and repeated
    failures and failed product relaunches.

    Who do you want to associate with, apple?

  3. Re:Huh? ... well $9 billion sounds fair ... by hcs_$reboot · · Score: 1

    Was $1 billion a couple years ago. Could also be that Apple doesn't care switching to Bing. This huge $9b amount is not only to have users go through Google, it's also to prevent the same users from going through Bing.

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  4. Re:Huh? ... well $9 billion sounds fair ... by Freischutz · · Score: 1

    Was $1 billion a couple years ago. Could also be that Apple doesn't care switching to Bing. This huge $9b amount is not only to have users go through Google, it's also to prevent the same users from going through Bing.

    I will cry dry tears over Bing (or any other search engine) gaining market share and Google getting some competition, Google is in urgent need of some serious competition.

  5. duckduckgo by Anonymous Coward · · Score: 1

    btw,

    rather than donating your history and ad money to google, why not use duckduckgo.

    I switched years ago, and feel dirty when I use google.

    duckduckgo context !bangs are very convenient.

    !amazon blue shirt
    !youtube blue cat
    !w linux
    or even
    !g duckduckgo

    1. Re:duckduckgo by hcs_$reboot · · Score: 1

      I switched years ago, and feel dirty when I use google

      DDG does not perform as well as Google. Better use Bing, still!

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      Slashdot, fix the reply notifications... You won't get away with it...
    2. Re:duckduckgo by Megol · · Score: 1

      Isn't DDG using Bing as the real engine anyway?

      The proper way to do it would be a distributed search engine, let users work together to do searches and compensate by removing ads or something. Of course that way lies communism /s.

  6. Re:Huh? ... well $9 billion sounds fair ... by AHuxley · · Score: 2

    A search engine that finds results again. Not just what was not deranked.

    --
    Domestic spying is now "Benign Information Gathering"
  7. Me too by MS · · Score: 1

    I wrote a small search engine in 1996 - it's still alive, but counts only about 120 visitors a day.
    I would have a lot more visitors (and earnings through advertising), if it was the default SE on Android phones.
    Thus I also demand 9 billion US$ from Google - where can I collect?

    1. Re: Me too by Megol · · Score: 1

      Why do you think every word is trademarked?

    2. Re: Me too by MS · · Score: 1

      Exactly: I fear being slasdotted. All I seek is revenue, not downtime.

    3. Re:Me too by blind+biker · · Score: 1

      Would you care to share a link to your search engine? I would genuinely like to try it out a bit.

      --
      "The agriculture ministry is not in charge of Gundam" - Japanese ministry official.
  8. Re:Reduced by Hognoxious · · Score: 1

    I suspect this is the opening gambit by Apple.

    As opposed to a closing one?

    --
    Confucius say, "Find worm in apple - bad. Find half a worm - worse."
  9. Re:Huh? ... well $9 billion sounds fair ... by hcs_$reboot · · Score: 1

    the default should not be influenced by money

    uh... so how is the default chosen? Google has better results, sure, but the difference is not consequent enough that Apple cannot make some (good) money out of it.

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  10. Don't pay it! by Tough+Love · · Score: 4, Interesting

    Sure, Apple crunched their numbers and they know that default search engine is worth more than $9 billion to Google. But if Apple is forced to go to Bing, or worse, implement its own search engine complete with data centers, it will instantly become the laughingstock of the entire internet. After all, crawling back to Microsoft after Bill Gates made Steve Jobs grovel on TV for a $200 million investment. It just doesn't get funnier than that.

    If Apple doesn't offer Google by default, it will end up losing way more than $9 billion in sales from customer defections. Go ahead Google, you can easily afford the downside risk. Let Apple learn by doing.

    --
    When all you have is a hammer, every problem starts to look like a thumb.
    1. Re:Don't pay it! by samkass · · Score: 3, Insightful

      Apple and Microsoft have many business relationships, and the $200M lawsuit settlement and licensing deal is (really) old news. Bing is not as good as Google, but not bad... most users won't notice. The ones who care will just change the default. Google will lose out on billions in revenue. No one will switch any of their products. It's not that big a deal-- Apple is just asking what their platform is worth. It's ok whether this deal happens or not. Google's probably got the most to lose, but I'm sure they'll do just fine.

      --
      E pluribus unum
    2. Re:Don't pay it! by fluffernutter · · Score: 1

      This is what I was thinking.... I wasn't aware there was another search engine on the planet that could realistically be used as a default.

      --
      Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
    3. Re:Don't pay it! by xgerrit · · Score: 1

      If Apple doesn't offer Google by default, it will end up losing way more than $9 billion in sales from customer defections. Go ahead Google, you can easily afford the downside risk. Let Apple learn by doing.

      I know a lot of people in tech who use DuckDuckGo. (Which is powered by Bing.) So if smart, tech-savvy people are fine with not using Google, I'm not sure there would be as much of an outcry as you'd think. The real danger to Google is that Apple demonstrates another search engine could be a viable alternative. They would also single-handedly force major advertisers to allocate a chunk of their ad budget to Google's search competition, and that would cement Facebook as the go-to place for internet ads.

    4. Re:Don't pay it! by Tough+Love · · Score: 1

      the $200M lawsuit settlement and licensing deal is (really) old news

      You have your news confused. Actually, it was only $150 million. It was a direct investment in Apple by Microsoft. Here is Bill Gates making Steve Jobs grovel to get the money.

      --
      When all you have is a hammer, every problem starts to look like a thumb.
    5. Re:Don't pay it! by Tough+Love · · Score: 1

      The real danger to Google is that Apple demonstrates another search engine could be a viable alternative.

      Google should take that bet. And I will be, as I said, sitting back with popcorn enjoying the ensuing hilarity.

      --
      When all you have is a hammer, every problem starts to look like a thumb.
  11. Re:Huh? ... well $9 billion sounds fair ... by Tough+Love · · Score: 1

    Could also be that Apple doesn't care switching to Bing.

    I really really really want Apple to switch to Bing. Sitting back with popcorn, waiting for that one.

    --
    When all you have is a hammer, every problem starts to look like a thumb.
  12. I've installed by Tsolias · · Score: 1

    browsers with google as the default search engine on people's computers, maybe google should pay me, too.

  13. 'May be', 'estimated' by MrL0G1C · · Score: 2

    The title is stated as fact what the summary clearly states is just a guestimate. Amazing how pretty much every thread here so far has missed that and is discussing this like the title is 100% fact.

    --
    Waterfox - a Firefox fork with legacy extension support, security updates and better privacy by default.
  14. BecIt'sNotGoogle by buravirgil · · Score: 1

    Likely not news to any Slashdotter, but the rumor I heard when BING came around was BecauseIt'sNotGoogle. Microsoft's ambition was to corral the web through its .net domains and services, but failed. I have always tried to be vigilant about comparing go-fers since '96. Dogpile wasn't as relevant as I had hoped. I was a Google-booster when Yahoo (recall powered by HP?) and Alta-Vista failed to identify paid listings and was impressed by Bing's early image searches, but was still "loyal" to Google and volunteered my time to assist its image search (if anyone remembers that).

    And then along came FaceBook in '05, and by '08, I was dismayed to see how many personal photos were behind its walls. I groused about J-Stor before Lessig paid public attention (but was awakened by his first presentations about copyright) and that inherently non-egalitarian and isolationist trend that sent Aaron Schwartz over an edge. The commoditization of the web is truly painful to have lived through, but I'd be a fool to think another outcome is likely. Between then and now, an interim of dead-links (or forward to a hosting company) is a cold, cold feeling, but a tropical zone compared to the efforts to remove a uniform resource locater from users. TRON was supposed to be fiction ;)

    --
    Would were! Should is! Could be! And live a hundred times three.
    1. Re:BecIt'sNotGoogle by jon3k · · Score: 1

      Well said. I think the only question now is it too late to save the web, and is it worth saving? Can decentralization really work?

  15. Re:Advertising Revenue? by Pinky's+Brain · · Score: 1

    IMO they are trying to avoid getting anti-trust lawsuits aimed at them, if they take everything in house they are painting a bullseye on themselves.

    Gotta leave some crumbs.

  16. Re:Huh? ... well $9 billion sounds fair ... by hcs_$reboot · · Score: 1

    uh... you just open a tab with bing inside...

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    Slashdot, fix the reply notifications... You won't get away with it...
  17. PageRank patent; Googlebot whitelisting by tepples · · Score: 1

    Thats what is so neat about capitalism and allowing free market competition. Another really great search service can grow.

    Not until the PageRank patent expires at the very least. In addition, I've seen a lot of sites whitelist Googlebot in /robots.txt and in Flexible Sampling (inclusion of paywalled sites in Search), and these sites might not be so willing to do the work to extend the whitelist to cover a competitor.

    1. Re:PageRank patent; Googlebot whitelisting by Anonymous Coward · · Score: 1

      PageRank patent expired last year.

  18. Re:Huh? ... well $9 billion sounds fair ... by Wycliffe · · Score: 1

    uh... so how is the default chosen? Google has better results, sure, but the difference is not consequent enough that Apple cannot make some (good) money out of it.

    Why do you have to choose a default? Apple already asks setup questions when you first turn on a device. Of course then it would just shift to charging companies to show up in the list of options. You could do a blank box and let the user type in the url but that is hard on the semiliterate users.

    Whatever solution, it makes my skin crawls when one monopoly is giving billions of dollars to a different monopoly in order to maintain those monopolies. Anyone who isn't disturbed by this isn't paying attention.

  19. Late Stage Capitalism by DaMattster · · Score: 1

    Folks, this is just Late Stage Capitalism greed. I am hoping all this greed will one day just be these guys undoing.

  20. Product, not customer. by Cmdln+Daco · · Score: 1

    It seems like Apple has decided that people who use their phones are a product, to be sold to Google, not a customer.

  21. Well isn't that conveeeeeeniet by RonVNX · · Score: 1

    Makes a big dent in that payment they have to make to Irish tax authorities.

  22. Who else would they use? by Pezbian · · Score: 1

    It's not like Yahoo is a candidate... or Bing.

    --
    In a world of the blind, the one-eyed man is king--and the two-eyed man is a heretic.
  23. Talk about out exploitive price gouging by edris90 · · Score: 1

    9billion for 2 seconds to change 1 string variable in the source code...... Jesus Christ Apple are you delusional?

  24. Re: Reseller Channel by edris90 · · Score: 2

    That's 9 billion dollars wasted om arbitrary bullshit that could have been used to make the world a better place for individuals access to food shelter and water and clothing. 9billion dollars blackholed into trivial conceptual nonsense. Oh our poor retarded business leaders. They won't stop until everything has been made pointless and counter productive to a healthy autonomous population.

  25. Re: Reseller Channel by Anonymous Coward · · Score: 1

    False premise. You seem to think that Google only had two options for this money - paying Apple to make Google a default, or charity. Google would have spent that $9B on coffee and donuts for employees long before the things you suggest.

  26. Re:What monopoly? by Stormwatch · · Score: 1

    Apple has like a paltry 1% share.

    iOS still has a 14% market share on smartphones. Source.

  27. Google should be charging Apple by found404 · · Score: 1

    Google is undervaluing the services they provide. They should think about charging Apple for Maps, Youtube, Docs, Translate, Search... or knock all their users off these services unless they install Google Frameworks on their devices:) Apple is a wall-garden afterall. Let them be a walled-garden, isolated from the rest the world. Provide 3rd-rate solutions to go along with their increasingly brick-like devices.

  28. Re:What monopoly? by Wycliffe · · Score: 1

    Have you not read the paper? Apple has like a paltry 1% share. They are barely hanging on.

    Apple has a 43% market share in the USA and if you only talk about "high end" phones or "contract phones" then it's likely
    considerably higher. Android has a larger market share only because it also sells a bunch of low end devices and between
    the two of them (google and apple), they control virtually 100% of the smartphone market.

    https://www.macrumors.com/2017...
    https://www.pcmag.com/news/358...

  29. Re: Reseller Channel by edris90 · · Score: 1

    Well if Google being allowed to accumulate power and wealth does not benefit the world populace in the end then what rational benefit is there to upholding values provide opportunities for Google to hold on to that wealth. The only reason for the poor to allow the rich to accumulate their wealth is if the rich act as custodians to the poor. Because it is only by the contributed efforts of the poor the values are maintained. in return for maintaining values that allow you to be successful we expect a return