Apple Income From Google Referrals.

Om Malik and John Gruber appear interested in what Apple’s pulling down from Google search referrals from Safari.

I’m not sure why this is; it’s not a lot of money for Apple’s bottom line, and I believe their primary goal with Safari is to help establish more web sites on open standards (e.g., not IE-specific).

Anyway, the reason I’m writing about this is I take exception to one thing Gruber mentions:

One might also presume – as I do – that Apple has better negotiators than the Mozilla Foundation, and that Google pays Apple more per referral than they do Mozilla. (E.g., Apple may well argue that Safari users, as a whole, are demographically more appealing than Firefox users.)

Gruber explains in a footnote that by “better negotiators” he means Steve Jobs.

The reason I take exception to this isn’t because I question Jobs’ negotiating skills. I do not. Rather, I think what makes him a great negotiator is that he knows when he has something to negotiate with, how much it’s worth, is great at playing “chicken”, and likely calls a mean bluff.

But Gruber’s example that Safari users are “demographically more appealing” makes little sense to me. Firefox users are clearly pretty savvy — after all, they’ve gone out of their way to avoid the default browser on their Windows PC or Mac.

Sure, you can argue (and there are statistics to back it up), that Mac users use the internet more, and spend more. But someone using Firefox on the Mac is already in that demographic anyway. The idea that a Safari user on a Mac is somehow more savvy than a Firefox user on a Mac would make no sense.

This is how I see such negotiations taking place:

Jobs: We’ve calculated what you pay Mozilla per referral, but our user base is more savvy so we expect 10% (Note: insert your own percentage) more.

Google: We don’t see your user base as being any more savvy than the Firefox user base, whether on Windows or Mac OS X, so, no.

Jobs: Fine. We’ll just make Yahoo! the default search engine on Safari.

Google: OK. Your savvy users will change the default to Google anyway. And we won’t have to pay you a dime.

Jobs: Nope. We won’t offer Google as a search option.

Google: It’s your funeral. Hey, while you’re at it, remove it from the iPhone, too. Meanwhile, there will arise such a hue and outcry from your user base we think it’ll take maybe two weeks before you recant with some silly excuse and bring Google back as an option. Then your users will switch to it, and did we mention that when that happens we won’t have to pay you a dime?

Jobs: Well, um, I’ll get back to you on that…

(A huddle of Apple execs ensues, where Schiller slaps Jobs upside the head and reminds him that his greatness in negotiating is having something to freakin’ negotiate with.)

Jobs: Yeah, what Mozilla gets will work just fine with us.

To be sure, Apple could have something to offer Google for better referral rates. However, I don’t believe arguing demographics will cut it here.

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10 thoughts on “Apple Income From Google Referrals.

  1. The amount of this to Apple is nothing – the Google guys its on the board of Apple and Google offers this:

    http://www.google.com/mac.html

    In return, Apple offers this:

    http://www.apple.com/webapps/searchtools/googlesearch_google.html

    It’s a mutual beneficiary admiration society … SAfari may not be huge but it’s THE APPLE BROWSER loaded on every Mac (and its influence in blogging, video, creative, etc, etc …) and EVERY IPHONE. Who would not want to be the search?

    Of course, Apple is not going to cram a search down your throat unlike MS – what do they care if only 8% of users use MSN search, it’s loaded first … Apple realized Google was the choice and worked out a mutual swap. For Apple it’s like putting condiments on the table. They are smart enough to realize people want search and if you don’t give them what they want, they’ll just find it themselves and be annoyed they have to load it that way … it doesn’t hurt or harm Apple – search is not their business and it’s a condiment/compliment by making life easier for its users … if they make a few bucks great – but the last way Apple negotiates is the way you outlined above. Apple doesn’t try and nickel & dime you or force anything on you. Just look at itunes, what other company with 70% market share would allow you to turn off the itunes store with ONE CLICK … does MS let you turn off the storefront in Zune?

  2. basically anyone using Safari over Firefox can’t be all that savvy. :)

    @ Beanie: I basically use your configuration in reverse. I use Firefox and the IE plug in for Firefox if it seems like a site is too IE specific to view properly. I have safari but use it about once a month. It’s just too simple (in the bad way). It reminds me of the web browsers you make in the second week of Visual Basic programming class.

    Beside, there is no way I’m ever image searching on Google with the Piclens extension ever again so Firefox wins again.

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  4. For those still using WinXP:
    Turn on ClearType for font smoothing on WinXP if you feel Firefox needs better smoothing on your LCD screen. WinXP uses standard font-smoothing as the default. Just right-click desktop choose Appearance, click Effects button, choose method of font smoothing to ClearType from standard in the drop-down box. There is also a ClearType Tuner, web-based or download, if you want to adjust it.

    I think Safari for Windows adoption will be low. It is too simple and not very configurable. I use IE7 98% of the time with Firefox as a backup.

  5. Jeff,

    I don’t disagree with your interpretation of “demographically more appealing”, but I think it goes beyond that. From a Google standpoint, they need people to actually USE the search engine. Therefore the ideal demographic would be one that will utilize Google search more than average. “Savvy” is just my short-hand way of characterizing the whole group.

    I already mentioned that any Mac Firefox user every bit as “savvy” as a Mac Safari user because they’re both using Macs. As for the PC, I believe they’re “savvy” because they went out of their way to switch from IE. Any user who does that is far more likely to use internet tools such as Google more frequently.

    I think something that needs stating is that there may be a belief that everyone does internet search, but I am surprised by the number of people who do not. Just like people who will not use a dictionary, but rather ask people how to spell a word, there are a ton of people who don’t use search, or rarely do so. Instead they just go to a site they’ve heard about, or a pre-loaded bookmark in their browser, or where friends point them. Google isn’t as interested in these people.

    I stand by my contention that for Jobs to try negotiating that Safari users will essentially utilize Google search more than Firefox users — and therefore Apple requires more money for their referrals — is just plain wrong.

  6. this whole article is based on a mis-interpretation of “demographically more appealing.” i would guess, on average, that safari users have higher incomes because it’s the mac default browser. firefox has a userbase on linux, which is a userbase that obviously values free (as in beer and in speech) very highly. i don’t see where they’ve said that safari users are more “savvy.”

  7. Bryce,

    That’s certainly one argument. But blindly using the search it ships with is worthless if one doesn’t search very much. I believe what Gruber was trying to convey is that savvy users will utilize search a whole lot more than non-savvy ones. In this I agree with him. Where I disagree is that a Safari user is somehow more savvy than a Firefox user.

    Besides, since both Firefox and Safari ship with Google as default there’d still be no reason for Apple to command more money.

  8. The savvy users will ignore the defaults and configure the machine however they prefer. It therefore makes sense to pay more for non-savvy users who will blindly use whatever the browser ships with.

  9. The best negotiations skills of Steve Jobs would be shown if he is not part of this negotiation with Google!

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