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Google Businesses Communications Iphone Software The Almighty Buck The Internet Apple Hardware

Google Pays Apple $3 Billion Per Year To Remain On the iPhone, Analyst Says (cnbc.com) 101

In a note to investors on Monday, Bernstein analyst A.M. Sacconaghi Jr. said Google is paying Apple billions of dollars per year to remain the default search engine on iPhones and iPads. "The firm believes that Google will pay Apple about $3 billion this year, up from $1 billion just three years ago, and that Google's licensing fees make up a large bulk of Apple's services business," reports CNBC. From the report: "Court documents indicate that Google paid Apple $1 billion in 2014, and we estimate that total Google payments to Apple in FY 17 may approach $3 billion," Bernstein analyst A.M. Sacconaghi Jr. said. "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."

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Google Pays Apple $3 Billion Per Year To Remain On the iPhone, Analyst Says

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  • ROI (Score:5, Insightful)

    by Anonymous Coward on Monday August 14, 2017 @08:59PM (#55013943)

    I presume G has done the ROI calculation of gaining iDevice search ad revenue, and it is estimated to have increased by more than that $3B, but I really think G would be better off letting Apple default to using Bing for a year. The Android eco-system (and the Pixel group) will love the increased customers.

    • >but I really think G would be better off letting Apple default to using Bing for a year

      Shots fired.

    • This is not money for access but rather to make sure Bing can't have the default spot.

  • by PPH ( 736903 ) on Monday August 14, 2017 @09:39PM (#55014165)

    Or we will switch our users to Apple Maps. And you will never see any of us again.

  • If google wasn't the default, what search engine would iOS users actually use? My guess would be google. What other option is there? Bing? Yahoo? This sounds like a waste of 3 billion for Google.
  • OR (Score:5, Informative)

    by sit1963nz ( 934837 ) on Monday August 14, 2017 @09:47PM (#55014211)
    Google knows it will more than make up the $3 Billion from Apple users so it is willing to spend that money.

    It has been shown time and time again that Apple users are more willing to buy stuff, therefore the ads to Apple users are worth more to Google and the people who place the adverts.
    • by sd4f ( 1891894 )
      I agree, I've read articles from a few years ago that based on spend, advertising on apple was most profitable, while advertising on android returned a net loss (i.e. don't recover the cost of advertising). This is where apple really got it right; premium product with premium customers. Android might have market share, but reality is, most of the users are worthless.
      • Android might have market share, but reality is, most of the users are worthless.

        It's advertising to people who understand that they have a choice that's worthless.

  • Nice to get an inside look at how the invisible hand helps the market decide.

  • My wife is on the iphone all year long too, and she doesn't get paid a cent :(

  • So 20 years after Microsoft, Google has to save Apple now. Doomed.

    He said in jest.

  • my last two iPhone and this iPad both defaulted to bing... everything Siri does has the powered by Bing logo... have to explicitly say "search google" to get her to do it
  • I'd like to see Google's reasons for this. I don't believe they think a significant number of people would choose something else if they didn't pay. Or maybe most people are so lazy or care so little that they would leave whatever the default search engine was.

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