Why Apple, Google are the best of enemies
PALO ALTO, Calif. -- Last week my colleague Matt Yglesias and I took turns playing out a fantastical 10-part shooting war between Apple and Google. We had fun doing it, and, at least in the early rounds, we stuck to halfway realistic scenarios for hostilities between the two tech giants: Apple removes Google as the default search engine in its mobile devices; Google removes any mention of Apple from its search results, etc.
But the whole idea of any kind of war between Apple and Google is pretty silly. That's because, even if they'd never admit it, both firms are smart enough to know they need each other. Apple would be a much less successful company, and its products would be much less useful, if Google wasn't around. And Google would hardly be the giant it is if not for Apple.
The grand narrative of the tech industry is that Google and Apple -- and Amazon and Facebook -- are all at one another's throats. In the spring of 2011, Google chairman Eric Schmidt described them as the leading "gang of four" in the tech industry. A few months later, I wrote a cover story for Fast Company declaring these firms the most important in the world today -- and, I added, they're "on the verge of war." This was a rhetorical flourish to describe their increasingly competitive interests. In the past, these companies maintained largely separate businesses. Apple sold hardware. Google did search. Facebook was a social network. And Amazon was an online store. But now they're all vying to become not just the most successful firms in tech but the most consequential companies in any industry, anywhere. (I'm writing a book on these firms' battle for dominance.)
But I think we often pay outsized attention to the rivalry, and we don't look enough at the friendly (albeit sometimes grudging) cooperation among these companies. The release of any single iOS or Android device is boring, but put it in a larger context of a war between Apple and Google and you've got a juicy story. Can Facebook build a Web-advertising network that rivals Google's? Can Google create a viable alternative to Amazon Prime? Will Apple's online service ever rival Google's? To journalists, these questions are irresistible. You readers also love rivalries; every time I praise a Google product, pan an Apple product or vice versa, I hear from throngs of people who wonder why I'm in the tank for one or the other.
No one should be in the tank for any one of these firms, because each would be diminished without the others. We're better off with all of them. To see why, let's go through the four one by one.
Apple makes most of its profits from sales of the iPhone and the iPad. Now, imagine these devices without Google. First, your maps would be lousy. The iPhone wouldn't have even had a maps app at first. Steve Jobs reportedly thought of the feature at the last minute, and the company had to hastily cut a deal with Google to get maps on the phone. What would the iPhone have been without a Google Maps app? Not totally useless, but surely slightly less than the magical mobile computer it was.
Also, the iPhone wouldn't have had Google search, Gmail or YouTube. Apple either would have had to rely on subpar providers like Yahoo for these services or make them itself. As we saw later, when Apple did replace Google's maps with its own, Apple is much better at outsourcing to Google than copying it.
In various smaller ways, Facebook and Amazon make Apple better, too. Facebook is the most popular mobile app; about a fifth of the time we spend on mobile devices is spent on Facebook. To the extent that people's addiction to Facebook fuels their desire to buy iPhones and iPads, Apple is better off with the social network. Facebook also functions as an easy sign-on system for many iOS apps, and Amazon's cloud storage system has helped foster all the startups that populate that Apple's App Store. Would Instagram have been such a hit without Facebook and Amazon? Maybe, eventually, but it likely would have grown more slowly than it did. And for many users, an iPhone without must-have apps like Instagram would be a much less useful device.
Now let's look at Google. The search company makes all of its money from advertising. The fastest-growing slice of its business is ads displayed on mobile devices. Because most stats show that iPhone and iPad owners surf the Web much more often than Android owners do, a huge portion -- and perhaps the majority -- of the search company's mobile ad revenue comes from Apple devices. So, take away Apple, and Google's revenues shrink.
The Google-Facebook dynamic is more complicated, because they both compete for the same business: advertisers. Since advertising dollars are more or less fixed (the ad industry grows at single-digit percentages per year), you could make the case that both Google and Facebook would be stronger without the other around. Google, especially, would be pretty happy in a Facebook-less world -- its workers wouldn't defect and its ad rates would be higher. Yet I'd argue that Facebook has altered society's attitude toward privacy in a way that ultimately benefits Google, too. Thanks to Facebook, sharing stuff online, everywhere, has become an accepted and even expected part of life. Google thrives off such data -- and if it weren't for the way Facebook has changed society, Google would have a lot less data to mine.
Facebook is dependent on the others, too. Facebook recently reported that it now sees 819 million active users a month logging in through mobile devices. If Apple hadn't kicked off the mobile revolution and Google hadn't made smartphones cheap and plentiful, a lot of Facebook's users wouldn't have a way to get online -- in other words, they wouldn't be Facebook users. Earlier this year, Facebook released Home, a home screen that turns Android phones into Facebook phones. That's an example of parasitism at its most blatant: Google built the OS, and now Facebook's taking it over for its own ends.
Just like Facebook, Amazon took Android and redesigned it for its Kindle Fire line of tablets. Thus, no Google, no Android, no supercheap Amazon hardware. Jeff Bezos' retail juggernaut also gets a lot of search traffic from Google. From Apple, it gets Kindle readers and iOS app users, which indirectly fuel Amazon's cloud business.
These are only the most direct ties between these firms. I haven't even gotten to all the indirect ways they help one another -- how, for instance, the growth in Android devices has led to an increase in the production of mobile phone components, which lowers production costs for Apple, too. Or look at what's happened to mobile wireless speeds. Over the past few years, mobile carriers have built out their infrastructure, which has led to faster service at lower cost. Why did they do this? To service all the new smartphones people are buying -- that is, in response to devices made by Apple and, indirectly, Google. But the increased data capacity helps everyone: The faster your smartphone surfs the Web, the more you surf Facebook and the more you shop at Amazon.
So, sure, it's fun to imagine these companies fighting to the death. But that's just fantasy. In real life, they're all frenemies. They have to be. As smart as they all are, none of the four can make everything users want, from software to hardware to cloud services to e-commerce systems to social networking to apps to media and more. Instead they've all got to specialize, and we users get to pick and choose the best services from each of them. Like PB&J, they're better together.