Google Pays Apple $3 Billion USD to Remain Default iOS Search Engine
Making up a large portion of Apple’s services business.
According to reports, Google is paying Apple $3 billion USD to stay the default search engine on iPhones and iPads. Google paid Apple $1 billion USD three years ago for the same commitment and it’s speculated that its licensing fees make up a large portion of Apple’s services business.
According to Bernstein analyst A.M. Sacconaghi Jr:
“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.”
Sacconaghi also notes that Google may not pay Apple any licensing fees if it feels confident enough its search engine is so popular Apple won’t include any other option. But there’s also a possibility Google might be afraid to walk away from a licensing deal since Apple devices contribute close to 50% of Google’s mobile search revenue.
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