Google maps is a simple, efficient tool that atleast 1 billion people use monthly, to direct them to their destinations. Google does not reveal it’s figures for Google Maps, but an estimated amount for its revenue is at least $4.3 billion on an annual basis, which is why Google has bitten the bullet and beat its competitors!
It is trustworthy, accurate (for the most part!) and so easy to use that large companies such as transport service company Lyft, and Uber reportedly had to pay Google a sum of $58 million in order to use the Google Maps API in the years 2016 to 2018. Google maps is free for individual end users, but for businesses to make use of its services, Google levies a charge on them.
Uber and Lyft have previously been authorised to make use of Google Maps for business and service purposes by obtaining a licence from Alphabet Inc., Google’s parent company, after incurring the charges.
What is Google Maps API?
Google Maps API stands for Application Programming Interfaces. These APIs enable any authorized third party to communicate and effectively incorporate Google Maps into their application.
Google charges a certain fee to use Google Maps API, and it earns over $800 million in revenue just from API charges.
What services does Google Maps API provide?
1. Incorporate Google Maps into your own application or website and use it for tracking, ride sharing, etc.
2. Create your own map using Google’s satellite data and pin it onto your website or app.
3. You can also visualise street views and actual imagery using Google Maps!
Google has set up such a strong base in this industry that it is at least 6 times ahead of its nearest competitor. Its services are irreplaceable, and thus Uber has also sought to using Google Maps.
Why is Uber using Google Maps API?
Uber is a major ride-sharing service that has recently hit $100 billion in net worth, which is roughly the amount of Ford and General Motors combined.
Uber allows drivers to drive for them subject to various background checks, and provides private transport as well as carpooling services, operating in 633 cities worldwide.
To properly embed a map and tracking system into their application to ensure maximum safety and accuracy, Uber decided to make use of the Google Maps tracking system and thus incurred $58 million in charges for making use of Google Maps API for their app in the years 2016 and 2018.
Doesn’t a fee of $58 million sound too less for a giant like Google?
Yes, $58 million is but a meagre amount for Google. A loss of the same amount wouldn’t even cause a dent in the income of the company, who recorded an annual revenue of $110 billion in 2017 alone.
However, Google has many other ways to make money apart from heavily charging independent companies for their services.
How?
If we see the estimates for Google Maps itself, it has a revenue of $4.3 billion. So where does the rest of its revenue come from? Below are some of the reasons why Google didn’t burn a hole in Uber’s pockets:
1. Ads.
Google Maps receives at least $3 billion in revenue from advertisements and non-organic search results or in its destination auto-complete.
If a user searches for ‘cafes near me’ and supposedly a café owner has paid to show their café in local search listings, the café’s name and location will turn up in the user’s search listing and he/she may end up clicking on it and learning more about it, maybe even visiting the place which is a plus point for the café owner as well as Google Maps who got its commission in the form of ad revenue.
2. Alphabet Inc. and the stake
Interestingly, Alphabet is reported to have a 5.2% stake in Uber, which is also one of the reasons why Uber seemed to have received such an exclusive licence with Google Maps.
3. Brand Promotion
Not only is Uber benefitting from the usage of Google Maps, but Google itself is at an advantage when Uber has around 1.5 billion riders who see and make use of the embedded Google Maps in the Uber app. This helps Google build a stronger brand presence and promotes Google Maps on a completely different spectrum.
4. Give and Take
Uber is not the only one paying in this transaction. As it turns out, Google also has its own dues to pay. Uber charges around $3.1 million in charges for promoting the Google payment platform, known as Google Pay.
All things aside, Google Maps has been said to be a very under-monetized service and has a sustainable revenue model. Its affiliation with Uber and Lyft is of not much surprise due to the association of Alphabet Inc. and Uber.