Don't miss the latest stories
Google Pays Apple US$3 Billion To Stay As Default Search Engine On iOS Devices
By Yoon Sann Wong, 16 Aug 2017
In a note to investors on Monday, Bernstein announced that Google will pay Apple an estimated US$3 billion to remain as the default search engine on iOS gadgets such as the iPhone and iPad this year.
This amount is up from US$1 billion three years ago, with Google’s licensing fees making up majority of Apple’s services business.
Bernstein analyst A.M. Sacconaghi Jr. explained, “Court documents indicate that Google paid Apple $1B in 2014, and we estimate that total Google payments to Apple in FY 17 may approach $3B.”
“Given that Google payments are nearly all profit for Apple, Google alone may account for 5% of Apple’s total operating profits this year, and may account for 25% of total company OP growth over the last two years.”
Bernstein notes pros and cons with regards to the payments. On the one hand, Google could back away from paying Apple any licensing fees if it feels confident that its search engine is so popular, Apple won’t rope in any other alternative by default.
Having said that, Sacconaghi highlights that Apple’s iOS devices contribute to nearly half of Google’s mobile search revenue. As such, Google might not be willing to take the risk and walk away from its licensing partnership with Apple.
[via CNBC, image via Shutterstock]
More related news
Also check out these recent news