Google’s relationship with Apple — specifically the deal which sees Google search bundled into Apple’s Safari browser — is at the heart of the decision by the DOJ today to launch an antitrust case against the search giant.
But it’s also about more than just the bundling deal. As Constellation Research’s Ray Wang tells Which-50, “What we’re looking at is really this competition that’s been going on around the digital giants. And if you think about it, Google is the dominant player in search, and in digital advertising.
“Apple is one of the dominant players in mobile phones — not in terms of market share, but in terms of revenue. And what we’re looking at is really one of the first set of antitrust actions that have been taken by the US Department of Justice.
“What’s at the heart of it is an agreement that’s been made between Google and Apple to make Google the default search engine in the Safari search on your mobile phone,” Wang told Which-50. “There’s a payment for that on the other end, and that’s actually what’s at the heart of this. About one-third of Google’s profits are being paid to be able to have that position.”
He said that the capability also gives Apple a different type of competitive dynamic. “Now, the broader picture is Google and Apple compete massively against each other for Android [against iOS], yet there’s a deal like this that’s going on in the marketplace. That’s going to be the crux of the issue in terms of the antitrust. Is this completely anti-competitive, or is there some symbiotic relationship? And of course, with all antitrust issues you want to know [whether] the consumer benefits more, or are they being hindered in any way by this deal and having this kind of exclusivity.”
A long time coming
We also speak to Telstye’s Foad Fadaghi, who suggests the action is a long time coming. “The signs were there 10 to 15 years ago when we were measuring the market and reporting on the market back then — how big these companies were becoming and how important they were becoming to the whole digital ecosystem.
“It’s a challenge now that we are seeing maybe that was not well understood back then. And even if there was interest there wasn’t really the motivation to develop the kinds of regulations and rules that the market needs to create a fair environment for all participants,” he says.
Gai Le Roy, IAB Australia CEO, meanwhile, describes just how influential the digital advertising sector has become in the overall advertising market mix. “The digital advertising market is now worth about $9.1 billion in Australia. Over the last 20 years, we’ve gone from 90 million to that 9.1 billion. It [digital] now represents about 65 per cent of total ad spend.
“So it has gone from one per cent to 65 per cent in that twenty-year time frame.”
Note: This article was originally published on Oct 21, 2020 at 19:50