What is Apple's relationship with Google

Apple vs. Google: Pretty Best Enemies

From today's perspective, it may be hard to imagine - but there was actually a time when Apple and Google cultivated a close friendship. Apple founder Steve Jobs proudly presented the possibilities of the first iPhone one day using Google Maps. The then Google boss Eric Schmidt was even allowed to share the stage with Jobs at the memorable event. This is, however, a bit less surprising when you know that Schmidt was also part of the supervisory board of Apple at the time, in addition to his Google duties.

The big break

But then came Android - and suddenly nothing was like it was before. Jobs sees Google's development of its own smartphone operating system as a kind of personal betrayal - he had hoped to finally be able to completely dominate an industry with his own devices. Android threatened a repetition of the same fate that the Apple founder had to accept in the PC market: the limitation to one - albeit profitable - niche.

Ultimately, things shouldn't turn out that bad for Apple - the company still dominates the US market, which is particularly important financially, and the App Store also makes more money than Google's Play Store - but the break with the search engine manufacturer was lasting. While outwardly it was pretending that the competition in the smartphone market was not a big problem, behind the scenes there was a lot of boiling. According to Jobs biographer Walter Isaacson, the Apple founder had literally declared the "thermonuclear war" against Google internally.

At the official level, the break was much more civilized: Eric Schmidt withdrew from the Apple supervisory board in August 2009. In the accompanying press release, Jobs even sprinkled roses on his long-term partner: Schmidt was an excellent board member. However, since Google is increasingly competing with Apple's core business with Android and Chrome OS, the conflicts of interest are too strong for Schmidt to continue effectively doing his work for the iPhone manufacturer. However, this separation should not have happened to the two companies anyway - their cooperation had already attracted the interest of the US regulatory authority FTC, which wanted to investigate this "dominant market relationship" in more detail.

Clear relationships, right?

Since then, at least on the surface, conditions have been clearly defined: Apple and Google are something like antipodes in the smartphone market. While Apple advertises with privacy promises, Google is busy collecting data for its advertising business. Conversely, Google relies on openness and partnerships, while Apple does everything to keep users trapped in its ecosystem.

In reality, of course, the situation is much more complicated. For example, Apple's privacy promise is not fed from moral, but simply from strategic considerations. The company has identified a weak point in the competition that can be targeted because it is not doing any relevant advertising itself. The fact that they themselves have just caught a lawsuit about user tracking for advertising at the same time does not really fit into this public staging. With this debate, Apple has at least succeeded for many years in largely pushing other criticisms into the background: those of the constant lock-in efforts - the top priority of getting users into the "golden cage" and then of everyone to snag a single deal, regardless of whether it is about apps or hardware accessories.

The reality is more complicated

Conversely, the narrative of the oh-so-open Android is no less shortened. Sure - Android is still available as open source, and that has undeniable advantages. At the same time, however, Google has managed to get the Android ecosystem almost completely under its control through contracts.

Devices without Google services and without a Play Store can hardly be sold outside of China, as Huawei in particular has to painfully acknowledge. Many of the freedoms that are often emphasized around Android are merely theoretical in nature for the general public. This also applies to developers for whom there is no - realistic - way that leads around the Play Store, where Google then contributes no less to the revenue than Apple does.

Billion deals in the background

But above all: the relationship between the two companies is considerably more complex than it might seem at first glance. Because while one is publicly fighting for market share, one of the most lucrative deals in entire IT history is going on in the background. Every year, Google transfers between eight and twelve billion US dollars to Apple so that its own search engine on the iPhone remains the default choice. An agreement that is very important for both: for Google, above all, a strategic one, for Apple a financial one. Because even for the iPhone manufacturer that makes up a whopping 15 to 20 percent of the total profit.

And the topic of privacy is also different on closer inspection. Because while it may initially appear as if all the criticism - and this includes Apple's regular swipes - has negative effects on Google, it cannot be substantiated with figures . So far, this discussion has had just as little impact on Android's market share as it has on the use of popular Google services. This shows once again that, in surveys, users seem to be genuinely concerned about issues such as privacy; in practice, however, they rarely draw the appropriate conclusions - on the one hand for convenience, but also because the Google services often simply work very well.

The privacy criticism helps Google

On the contrary, one could argue that all the privacy discussions actually strengthened Google. So far, the company has skilfully navigated through all the regulatory attempts and all related legislative changes and, wherever possible, reversed them to an advantage. For example, the General Data Protection Regulation was advertised with the promise to put a stop to US IT giants. In reality, there was probably no company that was better prepared for this change than Google. While many small companies are still struggling with the effects of the GDPR, the software manufacturer from Mountain View in California had adjusted its systems to the rules on day one - at least to its own legal opinion.

The company doesn't care whether you have to make improvements later or even have to pay fines. If the EU lawsuits of recent years show anything, it is that companies like Google swallow billions in fines themselves without even blinking an eyelid. Simply because you can. As long as the money printing machine advertising business continues to run undisturbed, these are at best minor inconveniences on the way to the next record profit.

In the specific example, there is also the fact that, in view of the stricter data protection rules, many companies are increasingly reluctant to operate their own servers and prefer to outsource their infrastructure to the cloud - where companies such as Amazon, Microsoft or Google are waiting all the more. And those long-term gains are more important than one-off penalties.

The anti-tracking paradox

But what does Apple have to do with it? To make this clear, let's take a concrete example: As part of its privacy focus, the iPhone manufacturer has increasingly chosen "third party cookies" and cross-page trackers as opponents. That sounds like a substantial threat to Google, after all, the company collects massive amounts of such data via its advertising network. In reality, however, exactly the opposite is the case: if such trackers are banned, it may be bad for Google, but it is even worse for everyone else - and therefore, relatively speaking, good for Google again. After all, Google has so much direct information about its users through its own services such as Gmail, Google Maps or the Chrome browser that one does not depend on such information from third-party sources. For all the smaller advertising networks, however, this would probably be the death knell.

So what is Google doing in this situation? You just let other companies such as Apple and Mozilla move forward in peace and quiet, only to announce after a certain period of time that you have to follow the changing privacy expectations of users. So a few months ago Google announced the gradual end of "third party cookies" on Chrome. Everything is nice and slow, as it should be for a market leader, and "privacy-sensitive" interfaces are to be created as alternatives for advertisers. At the same time, there is probably no observer who doubts that Google's advertising business will be better off afterwards than before.

That this will be the end result of the current development has of course also caught the eye of many a competitor. So one tries to put pressure on Google through the cartel watchdogs to prevent these changes. The problem with this: Google is in a perfect situation in terms of argumentation - you can just sit back and say that you are merely following the market trend.

Above all, these privacy improvements are actually in the interests of the user. The proliferation of companies that are solely geared towards creating comprehensive user profiles and selling them profitably poses a serious problem. And such changes will make life much more difficult for them. It seems rather unlikely that the cartel watchdogs will actively oppose such significant improvements in privacy on the web - one can really only lose out in public opinion here.

Always a few steps ahead

Or to take a very recent example: Google has also learned the PR value of privacy measures from Apple - and skilfully combined this with strategic considerations. Google is currently preparing to unbundle its services again, i.e. only to carry out all the integrations between different services at the explicit request of the user. The first step in this direction has just been announced around Gmail, others are likely to follow soon.

You also make all the "smart" evaluations of the user emails optional - knowing full well that it is precisely this feature that sets your own offers apart and accordingly the vast majority of users will voluntarily consent anyway. However, this massively reduces the area of ​​attack for regulation attempts.

To avoid misunderstandings: Of course, these stricter privacy rules are still - at least mostly - positive for users. There is actually a lot of trouble on the Internet that needs to be cleaned up. However, anyone who thinks this is an effective means of getting a grip on large IT giants is under an illusion.

Pragmatism becomes cooperation

But back to the relationship between Apple and Google. Behind the scenes, this should no longer be as tense as it was a few years ago. But on the contrary. A recent investigation by the US Department of Justice reports, for example, that the current CEOs of Apple and Google - Tim Cook and Sundar Pichai - met in 2018 to discuss how search engine sales could be further increased . According to an email from a senior Apple employee, the conversation should have been quite fruitful: "Our vision is to work together like a company."

In other places, however, the harmony arises automatically. Google apps are still among the most popular on iOS - which is of course good for the Apple business. Conversely, Google naturally appreciates iOS as a platform - which is hardly less important than Android in internal calculations. In addition, Apple acts - as in other areas of Facebook - as a kind of protective shield for Google. This is shown very well in the current app store discussions. The Android manufacturer only has to interpret the rules around Android and the Play Store in a slightly less restrictive way than Apple, so that the main part of the criticism is diverted to the iPhone manufacturer.

Quite a symbiotic enmity

What remains is a simple reality: Apple and Google are probably the most successful duopoly in history in the smartphone market. And that will not change in the foreseeable future either, the dominance of Android and iOS is greater than ever, and a realistic challenger is not in sight. And while the competition between the fans is often carried out with a lot of passion, it is clear to the companies that they benefit from each other. So if you absolutely want to see the relationship between Apple and Google as an enmity, then it is quite a symbiotic one. (Andreas Proschofsky, November 29, 2020)