Apple and Google’s Partners

on July 2, 2015

It’s been a busy couple of weeks in tech news, despite the traditional summer lull where major news is concerned. Among the biggest news this past week has been Apple’s launch of Apple Music and Beats 1, and Microsoft’s sale of its display ad business to AOL (Verizon). I want to use these two particular items to highlight an interesting difference between Apple and Google that’s becoming increasingly clear and it relates specifically to these companies’ relationships with their partners.

Apple, Taylor Swift, and more

The obvious recent news story as it relates to Apple and its partners is the launch of Apple Music and, especially, the way in which Apple capitulated to the demands of Taylor Swift (and to a lesser extent, small independent music labels) in paying royalties. Apple sees musicians and their labels as key partners in its efforts to bring music services to consumers and has done so ever since it first launched the iTunes store a dozen years ago. These partners are critical to Apple’s success but Apple also makes clear, again and again, it wants to sustain and not disrupt these partners, to help them transform their businesses and adjust to the new realities in the music industry. First, the transition to digital and now, the transition to streaming. Though Apple undoubtedly benefits in both cases, its u-turn on paying royalties made starkly clear how committed it is to these partners and to having them as friends rather than enemies.

But Apple’s commitment to partners goes beyond music labels and musicians. Developers are a crucial set of partners for Apple, and it has made huge strides in providing, not just tools for creating apps, but an ecosystem in which those developers can actually make money in ways that don’t compromise their values. The TV and movie industries are another valuable set of partners and Apple’s new TV service is likely to reinforce that relationship. Interestingly, it seems Apple first attempted to partner with Pay TV providers, notably Time-Warner Cable and Comcast, but when those talks went nowhere, it partnered instead with the content owners and is now in the process of bypassing and potentially disrupting those previous potential partners. Yet another example is Apple Pay. Where Apple could have attempted to build its own proprietary payment system, instead partnered with banks and card issuers to create a system which they could benefit from it rather than be disrupted by it.

None of this is to say Apple has never disrupted anyone or that erstwhile partners haven’t eventually been excluded from Apple’s business or replaced by its own efforts. But, for the most part, Apple is a company that understands and leverages partnerships heavily in its business and generally treats those partners well.

Google: losing friends left and right

When it comes to Google, however, the trend is almost all in the opposite direction. Though the sale of Microsoft’s mapping and display ad businesses this week was the headline, an important part of the ad sale to AOL was that AOL would switch its search ads from Google’s to Microsoft’s. And this isn’t the first of Google’s search partners to switch sides – Firefox switched its default search provider from Google to Yahoo in the US late last year and Google has lost several points of market share as a result. Of course, there’s Apple itself. Then-CEO Eric Schmidt was on stage at the first iPhone launch event to talk about the points of integration between Google and Apple (and even jokingly suggested merging the two companies while on stage), but Apple is one of a number of companies which started out as a close partner of Google and slowly saw Google encroach on its territory and, therefore, began to distance itself. This began with the exclusion of YouTube and Google Maps from iOS a couple of years ago but has also more subtly continued with the advances Apple is making in Spotlight and Siri, both of which have switched to Bing as their underlying search engine and are pre-empting many Google searches.

But these aren’t the only partners Google is slowly losing: YouTube too, has been struggling to retain its key creative talent, as channel owners find it harder and harder to make a living on YouTube with the increasing restrictions Google is placing on monetization and they are starting to explore alternatives. The announcement Facebook would be sharing ad revenue with video content creators is yet another sign Facebook is serious about stealing away these creative types and the fact it’s gaining traction is further evidence of how Google has mistreated what should have been valuable partners.

Even when it comes to developers, which Google courts as Apple does with its annual developer conference in the summer, Google is constantly creating conflict with its attempts to get users back to the browser and out of their apps. The Chrome custom tab product announced at this year’s I/O, for example, was presented as a boon for developers, but seems like a fairly transparent ploy to get users back into a domain where Google can track them and serve ads. Its relationship with hardware vendors, too, has been thorny over the last few years as Google has attempted to regain control over Android and reduce the OEM customizations.

There are, of course, counter-examples here too, but the trend seems to be very much that Google is losing many of its most valuable partners one by one. This stems from its ruthless pursuit of its own business and advantages, often at the expense of these partners. If Google doesn’t change this behavior soon, it risks putting its business at serious risk from former partners who turn against it and sidle up to competitors instead.