TL;DR
Google has been paying Apple close to a massive $3 Billion a year to stay as the default search engine on Safari browsers across all iOS devices!
Google and Apple have been in the midst of one of the biggest Cold War-ish rivalries in tech history. While they both compete with each there like there’s no tomorrow, they sometimes partner on some very specific deals as well. One such deal: Google paying a boatload of money to stay the default search engine on iOS.
Reported by CNBC, Google might end up paying as much as $3 billion a year just to stay the default option in Safari, said Bernstein stating that a previous court document from 2014 specified that Google had agreed to pay $1 billion every year to remain the default search engine on iOS back in 2014.
Looking at Apple’s services revenue, particularly licensing revenue, as well as Google’s traffic acquisition costs, that number would certainly be close to $3 billion right now. This shows that Google is still highly dependent on the benefits of Apple. The vast majority of Google’s revenue comes from ads on search result pages. Apple accounts for roughly 18 percent of the smartphone market.
As most users update to the latest version of iOS every few months, it does not take long to change the default Search Engine setting on millions of iPhones. This is why Google has no choice but to spend a ton of money to acquire & retain this source of traffic.
A few years ago, every iPhone came shipped with built-in YouTube and Google Maps apps. Then, Apple realized that Google was becoming a serious competitor with Android. So the company removed the YouTube app from iOS and brought out Apple Maps, proving that Apple isn’t afraid to say NO to Google when it comes to features in iOS.
Apple might not be able to get the same kinda money from Microsoft’s Bing, Yahoo Search or DuckDuckGo, but Apple doesn’t really need it as it rakes in more than $45 billion of revenue every quarter now.
Experts Say:
It’s all about cutting at Google’s bottom line.
Apple is in a really strong position in this negotiation. While it’s true that Bing and DuckDuckGo have improved drastically over the years, they come nowhere close to Google search engine in non-English language uses.
– John Gruber
