Google and Apple might be competitors in the technology sphere, but they’re also partners. In fact, a report published on CNBC yesterday suggests that Google is paying Apple to the tune of billions of dollars per year in just one deal.
Citing investment research firm Bernstein, CNBC says that Google will pay an estimated $3 billion to Apple this year to ensure it remains the default search engine on iOS devices, up from a reported $1 billion three years ago. This money would be almost entirely profit for Apple — it won’t take much in terms of resources for it to assign Google as the default search engine — which means that Google itself could be providing a huge boost to Apple’s overall income.
“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,” said Bernstein analyst A.M. (Toni) Sacconaghi Jr.
This appears to be a good business deal for both parties: Google secures ad revenue (its major source of income) from basically its only competing mobile platform, while Apple gets a huge cash injection without any heavy lifting.
Apple’s iOS products are said to contribute “about 50 percent” to Google’s income from mobile search, which is a significant figure, but Google would no doubt prefer to avoid paying Apple for this privilege, if it had the means to.
The question is, how much would Google stand to lose if it wasn’t the default search engine on iOS devices? I mean, most people would still change the default search engine to Google anyway, right?