Google spends nearly $19 billion to give you free apps like Gmail and YouTube
Traffic acquisition costs are incurred by almost every developer aiming to boost its downloads and expand its userbase. Apple or Google are no strangers to this trend, but what differentiates them from your everyday developers is the extent and benefits of the traffic acquisition cost incurred by them. Nine out of ten smartphones have Google’s Android OS running in them, which means apps such as Gmail, YouTube, Google Drive Duo etc. are pre-installed on Android smartphones. As an Android user, have you ever wondered how much does Google pays to smartphone companies to house these popular apps?
In 2012, Google shelled out nearly 7% of its total expenditure on what it calls, “traffic acquisition costs” for smartphones carrying pre-loaded Google Apps. This is the amount Google pays to partner websites that run Google ads or services such as inbuilt Google apps. In 2016, Google has spent nearly thrice the amount on its traffic acquisition strategies. Every year, Google nearly spends $19 billion to provide these in-built facilities on Android smartphones. In fact, Google has paid nearly $3 billion to Apple to be the default search engine on built-in web searches on Safari.
With a hike in the purchasing power of individuals and increasing decline in smartphone prices, the world has seen a remarkable growth in the number of mobile subscriptions around the world. In the light of this growth, Google’s aim is to establish a monopoly over the search engine used by all these increasingly subscribed smartphones. As a part of its deal with Apple, Google search engine’s preference for built-in web searches on Safari amounts to the Android tech giant’s 50 percent of mobile revenue.
As a reward to the extravagantly spent “acquisition costs,” Google expects smartphones manufacturers to pre-install all of its primary apps, which means that the mobile manufacturers have to also house the Google Play Store. Considering the fact that the former is also the most widely used App platform, manufacturers are not left with much choice but to offer Android services and apps in its devices.
Several market analysts have raised serious concern over Google’s “traffic acquisition costs” raising questions such as, how will these costs differ with regard to mobile VS desktop? Other questions circle around the deal between Apple and Google over the latter paying $1 billion in 2014 for its search engine to be a priority of Safari web searches. Google, is tight-lipped about all such speculations and considering its growth, one mustn’t be afraid for the tech giant.
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