Why Google Is About To Pay Apple $9 Billion To Do Nothing

There's a saying as old as time itself, "Its about quality not quantity" this couldn't be more true for Apple. By no stretch of the imagination does Apple dominate the smartphone market. In fact it just got passed by Huawei as the worlds second largest phone manufacturer. With such a small market share, You'd think that Apple would be at the mercy of much larger and just as established OEMs. But as with many things in the tech world Apple enjoys an advantageous position in the market and that lets them do a few things that most if not all other OEMs can't do at scale. From making a chinless phone by bending an OLED display to making $150 dollar wireless headphones that would have most likely failed had another company made them.This vantage point given to Apple by its grip on software and hardware and it's almost cult like following has made it a force to be reckoned with.I mean they're about to sell their 2 billionth iPhone, With such a huge amount of people using their products they can influence how a ton of people consume content and use their phones with a single decision.We've seen this with the headphone jack, One decision made by Apple had far reaching consequences far outside the Apple ecosystem.
Google of all companies has been at the receiving end of this.

The Power Of Defaults

People rarely change their defaults, If a feature is on when a phone is bought chances are that the vast majority of people will be unaware that such a feature even exists. The only instance that I can think of where people don't use the default option is with Internet Explorer and Edge.Don't believe me? How many people you know went through the trouble of downloading and installing a launcher on their android device? My mom hasn't even changed her wallpaper since she got the phone. So its safe to assume that whatever the default is it stays on for the rest of the device's life for most people. Something that we don't really think about is the search engine we use on our phones. Sure you'd think you'd notice if your phone switched to another search engine but since we never really go to the homepage, that change is way less noticeable than you think.Apple used to use Bing for it's spotlight and Siri searches up until 2017. I doubt that most users even noticed the change.
When Apple did change just the search engines for Spotlight and Siri Google felt compelled to pay Apple a billion dollars to keep Google as the default search engine on iOS. This was back in 2016 Google has since paid Apple 3 billion dollars and is on track to pay Apple 9 billion in 2018. To put this into perspective Samsung made $13.4 Billion in profit in Q2 of 2018. Not Samsung Mobile but Samsung the entire company and Apple is getting a huge chunk of that for free

Why Does Google Care So Much About iOS Users?

The obvious answer is ad revenue but even with that logic it still doesn't make sense.Android users outnumber iOS users by a whole margin, it's not even close. With many times the users that iOS has you'd think that Google would cater more to it's own OS. But when you look at the numbers you see that a vast majority of the phones that run Android and not the high end flagships you hear about. According to the data from May 2018, In the Android devices that did make it to the top 10 most of them are relatively cheap devices, bar the Galaxy S9s. This is because most of Android's user base is now shifting to the developing world like India and China where cheap phones rule and paying for apps is unheard of.Well not unheard of but it certainly isn't as popular as it is in the west. With APKs available so easily these users are quite adept at finding and installing them thereby negating the need to actually buy the app.This makes the average Android user worth a lot less than the average iOS user who spends way more than his Android counterpart.The App Store's revenue is almost double that of the Play Store. This makes iOS users much more attractive to advertisers. They're willing to spend more for ads on iOS devices than Android devices as they're more likely to get paying customers. This has been the case for a while. You can find articles from as far back as 2012, Which says that Google earns 4 times more from iOS users than Android users. This was back in 2012 and iOS has seen explosive growth in that time frame one can imagine how much more iOS is worth to Google right now. Well a Goldman Sachs estimate says that Google earns 75% of its mobile ad revenue from iOS. In a world where computation is going mobile, It is not a good sign that a massive chunk of Googles advertising revenue, its main source of revenue, lies with a company that it competes with.