Price for Google’s search on Apple’s iOS could be $3bn
Apple and Google could be one of the biggest friends and enemies in tech. While they both compete like there’s no tomorrow, they also partner on some very specific deals. For example, Google is reportedly paying a lot of money to Apple to remain the default search engine on iOS.
In a report published by the CNBC, according to a Bernstein analyst, Google could pay as much as $3 billion a year just to remain the default option in Safari.
Business Insider also stated the Bernstein report and shared the thinking behind this number. Bernstein analyst Toni Sacconaghi starts from a previous court document from 2014 that stated that Google had to pay $1 billion every year to remain the default search engine on iOS back in 2014. However, the mobile traffic and as well as iPhone sales have been increasing steadily since then and if we look at Apple’s services revenue, the licensing revenue in particular, and as well as Google’s traffic acquisition costs, that number could be around $3 billion right now. This means that Google is still highly dependent on Apple’s iOS.
The vast majority of Google’s revenue comes from ads on search result pages. And Apple controls roughly 18 percent of the smartphone market. With more and more users updating their devices to the latest version of iOS in just a few months, it doesn’t take long to change the default setting on hundreds of millions of iPhones. Google has no choice but to spend a ton of money to acquire this traffic. Apple and Google have kept innovating and competing massively on the smartphone front. But they also partner on other aspects and pay each other.