Google makes more from Apple than Android? What a crock

UK newspaper The Guardian claims that Google’s Android operating system is far less valuable than Google’s revenues from Apple devices. The story was, of course, picked up and even a respected site like TheNextWeb reported it as fact.

According to the newspaper:

Android generated less than US$550m in revenues for Google between 2008 and the end of 2011, if figures provided by the search giant as part of a settlement offer with Oracle ahead of an expected patent and copyright infringement trial are an accurate guide.

The figures also suggest that Apple devices such as the iPhone, which use products such as its Maps as well as Google Search in its Safari browser, generated more than four times as much revenue for Google as its own handsets in the same period.

The Guardian showed its calculations to Google, but there was no response. And for good reason — the calculations are pure fantasy.

The Guardian report readily admits, “The court documents (PDF) do not explain how the Android revenue is calculated.”

There’s no leg work there’s just back of the envelope estimates with no solid sourcing. But there is a great story to be discovered.

For example, if Google’s numbers relate to ad revenues through Android then does that mean every ad network or publisher using Android will also have to pay Oracle?

Or is Google’s license payment shouldering liability for the entire advertising revenue stream through Android? Would a license deal between Google and Oracle create a competitive barrier?

Apple gets paid by the Telcos for signups, about US$200 each. Does Google get any signup revenues because of Android?

It’s all part of a much bigger unfolding story, the fastest change in our commercial infrastructure that we’ve ever witnessed.

But it’s also a time to be wary because Moore’s Law moves faster than people can make new laws. The internet makes possible new forms of commerce and new opportunities for distributing wealth, and they won’t all be good ones. We’re heading for truly transformative times.

Which is why I would hope that The Guardian, the New York Times, and the many other award-winning newsrooms everywhere, would double-down, and triple-down their investigative resources on Google et al. and investigate the business of the Internet — it’s a very rich load and we’ve only just begun.

There are massively important stories yet to be written about the business of the internet, ones that will change laws.

There are stories to be written with a potential impact greater than Upton Sinclair’s “The Jungle“.

Bloggers don’t have the resources for investigative journalism but newsrooms do. Let admins re-write press releases — put the reporters to work on purely original content. After all, what else is there for a newsroom to do that couldn’t be done for far less money? (as is being done).

Original content means you can only get it here — and it’s still the top currency in the news business — the only problem is that the exchange rate sucks.

But exchange rates can rise. We know that markets value scarcity so they’ll adjust and rightly reward original content, putting into motion a sustainable and moderately lucrative business cycle of original content creation, on which a layer of bloggers and aggregators can also thrive.

San Jose Mercury columnist Chris O’Brien makes an excellent point: Android saves Google a lot of money because it doesn’t have to pay third parties for search traffic.

Google pays to be the default search engine on Apple’s Safari browser. Again, we don’t know how much.

But imagine for a moment, as I wrote a couple of weeks ago, if Apple and iOS had the same marketshare as the iPad. How much more would Google have to pay for that spot?

… the explosion of Android devices has enhanced Google’s leverage in that relationship with Apple. Without Android, Apple could well have Google under its considerable thumb.