They are two of the largest tech giants, but oddly, good friends too
Being in very similar arenas, you could easily be forgiven for thinking these two behemoths, Google & Appleoogle
may well be arch rivals. However, if you peel back the surface layer just a tad, it turns out, nothing could be further from the truth. Actually, they are quite cosied up as it happens!
The $15 billion dollar sweetener
When you buy a new Mac, iPhone or iPad, we all know and are very well aware that Safari is the little blue button we tap to open up the browser. Subliminally, in the background as we type in ‘how to etc etc’, Google strikes up as the default search engine. That is no mistake, and is in no way Apple being all soppy and kind. It is a long-term business agreement that has the two corporations locked together in harmony. Recently, it has attracted some unwanted attention too.
It was eighteen years ago that their respective lawyers agreed upon this contract. At that point, Apple only retailed Macs (that enabled searches that is), and Google signed a deal that was to become golden years later. It tied Apple to make Google the default search engine on all Macs. As we now know, with the benefit of hindsight, Apple were soon to launch iPhones and iPads. These were popular among the masses in a way that Macs had never been, and they too had Google embedded as the search engine. Google were very sassy. Realising the untapped growth, they continued in paying ever larger amounts to Apple to keep them somewhat sweet. Advertising became the significant moneymaker for Google and there were millions of Apple devices used by people all around the world, daily. Tim Cook has acknowledged that Google are the best at what they do, and he is more than happy to keep this arrangement in place. Others, however, are not so pleased and that was the reason behind this year’s civil lawsuit. There is a tad more to this deal than first meets the eye, as we are about to discover.
Stay out of my kitchen
Whilst Tim Cook is more than happy to eulogise over the wonders of Google, Google themselves have, it would seem, got Apple in a particularly tidy agreement over their future development of a search engine to rival Google. In the civil lawsuit filed in California in January of this year, it’s contested that the two companies have a non-compete agreement in the internet search business that violates US antitrust laws. Basically, Apple has told Google, as long as they continue to pay to maintain Google as the default search engine on all their consumer devices, they, in turn, will not develop an Apple search engine. It is alleged there have been regular, secret meetings, in which Google have promised to share its advertising revenue with Apple so long as it is given preferential treatment on Apple devices. The class action believes that in turn, this has driven up the advertising rates higher than if a competitive system were in place.
Although the actual sums involved are a very closely guarded secret, in 2020 the New York Times reported that Apple were receiving $8 – 12 billion per year. Based on that figure, analysts now figure that sum could well have risen to as much as $15 billion. If that were true, then it would be, by far, the largest single payment that Google make annually and would make up a fifth of Apple’s annual profit too.
Apple CEO Tim Cook and Google CEO Sundar Pichai would doubtless argue that yes, the payments made are for Google to remain the default search option, users can select other search engines such as Microsoft’s Bing or Yahoo.
But it is not just one way traffic. Apple also pay Google too.
It goes both ways
Apple is now the largest customer for Googles, too. What for? For cloud storage and use of their servers.
Apple has seen substantial growth in the amount of data they require to store. It has grown so exponentially, in fact. They have outgrown their servers and thus have looked to Google.
Last year, Apple paid approximately $300 million for Google cloud storage, which was a 50% growth year-on-year. I am about to type some terms that sound the stuff of science fiction, you have been warned….
In November 2020, alone, Apple increased the amount of data stored on Google servers by 470 petabytes — in ONE month. At that time, that meant the total stored was 8 exabytes. To break that down a little in the real-world terms, if you recorded a video FaceTime call, it would have to last more than 200,000 years to equate to the same amount of data. They are such a massive account to Google, that within their ranks, Apple even has its nickname of Bigfoot. The data stored by Apple is massive by comparison to other large Google clients. The 470 petabytes I mentioned that Apple increased its storage by in a single month, equals the amount used in total by ByteDance, the makers of TikTok. Spotify, Googles third-largest client, stores only 460 petabytes.
Whilst Apple also uses Amazon Web Services for its iCloud data storage, the sheer volume they stored with Google demands a hefty discount, it would seem. The 8 exabytes of storage they use would normally be expected to cost around $218 million per month. Apple it seems only pays Google $300 million per year. All very cosy, right?
Amazon remains a large player in cloud storage, in fact, it is still the largest of them all. But, to safeguard their position, Google have been busy crafting out a unique niche for themselves. Google has created, solely for use by Apple, a form of data storage known as Object Storage. It was designed for Apple, helping them store audio and video files (all part of iCloud storage of course), along with documents.
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Originally published at https://www.talkingtechandaudio.com/blog on March 2nd, 2022.
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