Apple pays Google a ‘massive sum’ to be the default search engine on iOS

(NASDAQ:AAPL) has a little-discussed revenue stream that brings in several billion dollars each year. Apple’s Profitable Google Partnership: According to Bernstein analyst Toni Sacconaghi, Jr., Alphabet Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG) is on track to pay Apple about $15 billion. This fee is for Apple’s use of Google as the default search engine on iOS. According to the analyst, Google is estimated to have paid Apple $10 billion for the same in 2020, using recent disclosures in Apple’s public filings and Bernstein’s bottom-up analysis of acquisition expense payments traffic from Google.

Why regulatory risk is a silver lining for Apple and Google Why it matters: Google has come under the antitrust scanner because of the high annual payments it makes to Apple. The US Department of Justice could demand that Apple end its exclusive agreement with Google, giving other search engines equal access. Apple is already embroiled in a legal battle with Epic Games over its App Store fees.

Google’s TAC payments to Apple grew at a compound annual growth rate of 40% between 2016 and 2020, Sacconaghi noted. This is higher than Google’s overall TAC growth rate of 18%. This trend is likely to continue as Google’s payments to channel partners such as Apple and other search engine partnerships are growing faster than to members of its network or websites, the analyst said. Additionally, Apple’s share of mobile web traffic has grown significantly over the past five years.

In the meantime, Apple has started testing internal search technology, the FT reported late last year. With iOS14, Cupertino began showing its own search results and linking directly to the website when users enter queries from its home screen, the report adds. In premarket trading on Wednesday, Apple shares rose 0.25% to $149.99 and Google added 0.24% to $2,832.00.

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  • Apple pays Google a ‘massive sum’ to be the default search engine on iOS
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