Apple is paying Google a “massive sum” to become the default search engine for iOS

Apple is paying Google a "massive sum" to become the default search engine for iOS

Tech Highlights:

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

  • (NASDAQ:AAPL) has a little-discussed revenue stream that brings in multi-billion dollars every 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 around $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 Google’s traffic acquisition expenses payments.

Why Regulatory Risk Is A Silver Lining For Apple And Google Why It’s Important: Google has come under the antitrust scanner due to the hefty annual payments it makes to Apple. The U.S. Department of Justice may require Apple to end its exclusive agreement with Google, thereby giving equal access to other search engines. Apple is already embroiled in a legal battle with Epic Games regarding its App store fees.

In the interim, Apple has begun testing an in-house search technology, the FT reported late last year. With the iOS14, Cupertino has begun showing its own search results and linking directly to the website when users type queries from its home screen, the report added. In premarket trading Wednesday, Apple shares were up 0.25% at $ 149.99 and Google was adding 0.24% to $2,832.00.

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