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Culture War Roundup for the week of September 11, 2023

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Is Google playing to lose in this antitrust case?

These seem to be the facts: Google pays Apple $10bn a year to be the default search engine on iPhone. This fee amounts to pure rent-seeking behavior on Apple's part - if Google doesn't pay up, they can go to Microsoft (who, even if they're not willing to match Google's fee, will pay something, for reasons outlined below). Google is the most popular search engine, the great majority of users don't really care what the default search engine is anyway, and it costs Apple nothing in engineering, reputation or other costs to make Google the default. Essentially, Apple makes $10bn for nothing.

Why does Google pay? The iPhone search market is extremely important to Google. iPhone users make up the majority of affluent smartphone users in the world's wealthiest countries, which means that they're far more valuable to advertisers, and therefore Google's most valuable users. iOS also has supermajority marketshare among young people in the crucial 18-35 demographic in the US (and is disproportionately owned by affluent young people around the world), considered by far the most valuable to advertisers.

Losing the iPhone demographic to Bing would amount to cutting out the majority of affluent and/or young consumers in Google's key ad sales markets, a blow far more substantial than their percentage of Google's total userbase would suggest. So Google pays $10bn a year because the alternative is the enemy taking the most valuable customers (or customers of the customers, if you want to be pedantic) of their central product.


But this risk only exists if the alternative to Google is Bing. If the alternative to Google is the search engine equivalent of the browser choice screen that appears when you install Windows (after the antitrust trials of the 2000s), the problem is much reduced. The vast majority of Apple users, when presented with a choice at setup between, say, Google, Bing and DuckDuckGo will pick Google, the same way they currently do on PC (for both browser and search engine). A small number of Apple users might switch, but there's every chance these are worth far less to Google than $10bn a year, which Google pays to avoid Bing being the default, not to avoid a choice in which most people will choose them.

The biggest loser if Google loses the antitrust case isn't Google, it's Apple, who miss out on the $10bn. Even for the world's most profitable company, $10bn in pure margin represents 10% of net income in a good year, so that's no small amount. For Google, by contrast, as long as the great majority of iPhone users pick Google over Bing (and there is every indication that they will), they're freed from a $10bn ransom and don't have to hand over all their top users to Microsoft.

I think google is acting equally anti-competitive paying here. Maybe not today but definitely when this deal started out. They had a correct fear that someone else could come in here and establish themselves in search and use mobile as their ability to build market share in search. There is a reason they are willing to pay billions to lock up that market share.

It is illegal to sell at a loss to block entrants into a market. Search gets a little weird since the revenue comes in from the back door thru advertising but google can be argued to be committing. I’m not sure Apple monetizing the asset is illegal but google paying might be the part violating antitrust law.

Totally ignoring anything up with those numbers, that's still a big deal. 4% of a market cap of 2.7 trillion is $108 billion. Stock price and profit are the north stars of a corporation, and there just aren't that many ways to move them up by 4% in a given year. It's the same fallacy as 'covid only caused a 1-3% decline in US gdp year over year, a few percent is .. basically that nothing', a few percent of something massive is still very big. Sure, it isn't even close to existential, but whatever.

I guess - if you're a casual consumer of politics, sure, it's not a big deal, apple isn't going anywhere. If you're apple, especially someone at apple with this in your domain, it's a big deal.

It did not, you are wrong, and the OP is correct.

$170 billion profit in 2022

i tracked it down. yes I am wrong. https://www.wsj.com/market-data/quotes/AAPL/financials/annual/income-statement

for whatever reason, the Gross Income , which is 170 billion, does not include SG&A Expenses, which are quite substantial at $51 billion.

More than half of all smartphones are Apple, in the US. Interesting that the affluent set uses the most popular phone. You'd think there'd be a "rich people phone" that stands out among the plebs.

(Maybe it does, and it's the fanciness of said iPhone, i.e. new and not used, or more memory, that makes the difference.)

and it's the fanciness of said iPhone

As much as I might wish it wasn't true, iOS and the phones that run it are faster, better(1), and cheaper than the equivalent Android models and that's just the way it has been for the last 10 years. The only place Android phones meaningfully compete are on gimmicks (the folding or "gaming" phones that cost 1000+ dollars, and high refresh rate or wraparound screens) and the bottom-of-the-barrel sub-200-dollar phones, and I think the latter market segment does a lot to tarnish the halo effect the former products would otherwise enjoy. Same effect applies to laptops, which is part of why the affluent buy Macbooks rather than even more expensive Windows laptops.

And it's not really smoke and mirrors from a quality of materials (being solid aluminum slabs rather than plastic helps with this even though it means you need a machine shop to change the battery, and if you're keeping it for its full lifespan you will need to do this once) or performance standpoint either- that whole "we're going to make our own CPUs that are 4 years ahead of anything Qualcomm/Samsung are capable of" thing really paid off; so did the "we'll put an iPhone 13 in the shell of an iPhone 8, support it for 7 years, and sell it for Nexus/low-end Pixel money" thing. Unless you need some niche benefit or aren't well-off enough to take advantage of Boots Theory (and for 200 dollars there's always clearouts on the last-model SE anyway which still outperforms and will outlive any other device at that pricepoint because of that long support tail) there's really no reason to go with Android(2).

Oh yeah, and Apple Watches only work with iPhones so if you want one of those, well...

(1) Yes, you can't install system-wide adblock or root iPhones to keep them on software life support like you can with Android, and NewPipe doesn't exist for iOS which is a killer app in itself, but most people aren't technical enough to take advantage of that and it also subtly compromises the reliability of the phone as the versions get newer. It's also a massive pain in the ass to do it, too, since you have to erase all your software and data to flash a new ROM and it's generally more difficult and convoluted than installing Linux on a normal computer is.

(2) I understand the precedent that buying a locked-down appliance creates for computing devices from both a culture war (I'm pretty sure Gab still doesn't have an app) and actual war (though all phones are already pwned all the time because of the baseband processor- it's like Intel ME but a lot worse) standpoint, but at the end of the day (and I think a lot of custom Android ROM makers have realized this) phones are just VT-100s that go in your pocket and people only have so much time to become experts on their main connection to the outside world. Which, not coincidentally, is something a "stock" iPhone monoculture helps with; when you ask your friend how to do something they don't need to worry about whether it's stock Android, Samsung's S-Hit, or whatever other stupid Bonzi Buddy shell replacement the company you bought the phone from has forced upon you.

the bottom-of-the-barrel sub-200-dollar phones

I think I should be offended but I don't honestly care 😁

I picked Android over iPhone because (1) I don't have that kind of money to waste on a phone (whatever about American prices, Irish prices are always going to be way higher for the same model) and (2) what I want a phone for is to make and receive calls and send and receive texts. I have an app to check the weather and I check my email. That's about the size of what I do on the phone, apart from some apps such as banking one and a couple others. I don't have Apple Pay or Google Pay or anything like that. My Samsung does all that for me. I don't need a fancier phone, so getting Apple (and I never went for the cult of Apple) would really just be showing off "hey I can afford this fancy phone".

Some people like Apple products and will swear by them and stick with them no matter what, and they probably are better (maybe less innovative than when they started out) but eh. If I do something stupid like drop this phone down the toilet or smash it, I'm only out a small amount of money, not a grand or so.

Phones are too visually similar. The wealth signalling Apple accessory is the Apple Watch.

Americans got a lot of money. the lines between rich and upper-middle class becoming increasingly blurred , unlike decades ago (although the ultra rich will always be distinct a distinct class in itself ). You see it in the mainstream-ization of luxury car brands or luxury clothes brands.

There's just minimal differentiation of socioeconomic tier through tech, as well.

I remember during the COVID remote working era, being on an all-hands meeting at the company I was working for at the time, and it was pretty striking how essentially everybody between entry-level & the executive suite had more-or-less identical tech setups on camera.

Other users feel free to correct me if I'm wrong, but I've found that the most economical choice is actually to buy new iPhones whenever my old contract ends. Simply because I can sell the old one for 500-900$ and use that to pay off most or all of the cost of the new phone (which is usually discounted when you sign a 2 year data contract). I have found that the resale market for 2 year old Android phones is not as active (1 exception being the Galaxy series which are typically more expensive and feature-laden than iPhones)

iPhone resale is great. If you want to buy the asset that depreciates the least rather than the one that costs the least, iPhone will always win.

I have found that the resale market for 2 year old Android phones is not as active

But that doesn't matter if the cost of the phone is negligible.

Boost Mobile (formerly Virgin Mobile): 35 $/mo for the plan plus 100 or 150 $ / 4 a for the phone = 37 or 38 $/mo total

Wow I keep forgetting how extortionate US phone plans are. Here in the UK £8/month will get you a perfectly good SIM-only plan with 10+ GB of data, and unlimited data starts at £15/month.

I kept my 2014 model year until recently, for an amortized cost of <$100/yr. I'm expecting to do the same with my new phone, for a similar cost.

You can get bring-your-own-phone plans that are identical to the normal contracts for ~$30/month less (or at least I can), so by my reading you're paying net $30/mo + ???/2yrs = approx $400 per year for having a phone, in addition to the cost of the connection plan.

I'm seeing more like 10 a month discounted to bring your own device. You presumably still want some sort of new phone every ~6?(4?8?) years, so add the extra cost in divided by that period, and the extra cost to always have the newest phone seems still fairly marginal.

Apple has slowly stratified the offering so that there are now iPhones in the $300 to $1700 (Pro Max with max memory) range. You can buy a $1000 Celine or Burberry phone case or whatever, but I think the ultra high end market is limited by the fact that everyone knows you'll get a new phone in two years (or one, if you're rich and like tech). The Hermes Apple Watch partnership has worked well for them, but they very deliberately made the main Hermes part the strap, the watch itself can be swapped out for the next one when it releases.

(Maybe it does, and it's the fanciness of said iPhone, i.e. new and not used, or more memory, that makes the difference.)

More than likely it's a function of phone newness/age like you suggested. I actually got like a paragraph into writing up a whole comment about theoretical numbers on this before I thought maybe I should just google it and see if there are any numbers on the subject, and lo and behold Gallup has a poll from 2015 on this very subject. God bless those almost-certainly autistic pollsters and number crunchers over at Gallup. Anyway, the tl;dr is that 54% of Americans upgrade their phone "when it stops working or becomes totally obsolete," 44% upgrade as soon as their provider allows it, and 2% upgrade every year.

There's a more recent poll from Slashgear with slightly different numbers (11% upgrade every year) but their sample size is fairly small (631) and with no information on their polling methodology (did they partner with an actual polling firm or just send out an email to their subscribers?) I'm hesitant to accept their numbers at face value.

I just hope that somehow there is result that will allow other browser engines to enter the apple market.

The potential monkey's paw is that a verdict that kills the Apple Google search contract also kills the Mozilla Google search contract. Which then kills Firefox, because instead of building an endowment Mozilla spent a decade pissing away money on Parisian palaces, non-browser software experiments, headcount, and activism.