Google might pay $3 billion to Apple for default search
Apple and Google don't usually come in the same sentence unless we are pitting them against each other. However, there is more hobnobbing among them than they would like to show. For example, Bernstein, the investment research and management firm, estimates that Google will cough up nearly $3 billion to remain the default search engine on iOS devices. Here's more about it.
What's the deal?
Apple makes a killing through its licensing revenue and a chunk of it comes from Google, which pays it astronomical amounts to remain the default search engine on iPhones and iMacs. A court document shows that in 2014 Google had paid $1 billion for the same. It has now ballooned up to $3 billion, which is roughly about 5% of Apple's total operating profits.
Why the moolah?
This business handshake is symbiotic or fruitful is anyone's guess; but Bernstein calculates that Google's payments made 25% of the Cupertino giant's estimated $8.2 billion growth in operating profits, over the last two fiscals. At the same time, other studies show that 50% of Google's mobile search revenues stem from Apple devices. Both need each other for good business.
Let the other blink first
Bernstein opines that Google may just stop paying the fee once it's confident enough that it is the alpha search engine out there and Apple would have no option but to include it in its devices by default. That's wishful thinking. Apple might also come up with a search engine of its own. Until either of this happens, it's going to be this way.