Google Pays Apple $18B to $20B a Year to Be Default iOS Search Engine

[MacRumors]

It's widely known that Apple and Google have a considerable monetary agreement that ensures Google's position as the default search engine on Apple's iOS devices, but neither company reveals the amounts involved. In 2021, financial advisor Bernstein suggested Google was paying Apple as much as $10 billion a year to maintain the status quo. However, in a new investor note, the analyst claims Google's payment to Apple is now between $18 billion and $20 billion.

First reported by The Register, Bernstein published a report assessing the potential implications for Apple of the US government's ongoing antitrust trial against Google, with the Department of Justice considering Google's Information Services Agreement (ISA) with Apple as evidence that it has a search engine monopoly.

"We believe there is a possibility that federal courts rule against Google and force it to terminate its search deal with Apple," said Bernstein in the report seen by The Register. "We estimate that the ISA is worth $18B-20B in annual payments from Google to Apple, accounting for 14-16 percent of Apple's annual operating profits."

Bernstein says Google pays out 22 percent of total ad revenue under its traffic acquisition costs (TAC) and estimates Apple likely receives around 40 percent of this. Bernstein bases its numbers on Apple's public filings as well as a bottom-up analysis of Google's traffic acquisition costs. The DoJ has said in the trial that it thinks Apple receives around $10 billion from the ISA with Google, although its information comes from external sources.

"Importantly, Google is on trial, not Apple, and Apple could (in theory) partner with another search engine to be the default (and/or retain the agreement with Google outside the US)," the report states. "One more likely scenario is that Apple offers a choice screen. We note that Apple controls access to its installed base, which generates ~$60B + in advertising revenues, and accordingly, we believe that Apple would continue to command a commission (in the 25-30 percent range) for providing access to those search advertising revenues.

"Moreover, introduction of a choice screen could offer Apple the opportunity to potentially launch its own search engine as an option – something it could likely not do today without raising the eyebrows of regulators," the Bernstein report adds.

Last month, the trial revealed that Microsoft considered selling its Bing search engine to Apple. Had the acquisition happened, Bing would have replaced Google as the default search engine on Apple devices.

Experts say there is a chance Google could lose the case, which would put Apple's lucrative agreement, which has been in place for a decade, in significant jeopardy. However, a ruling in the case isn't expected before next year, and the likelihood is that proceedings will be extended by the lengthy appeals process.

Article Link: Google Pays Apple $18B to $20B a Year to Be Default iOS Search Engine

 

[Abazigal]

Apple has put in the effort to aggregate the best customers in the world. Of course it's going to cost people money if they want to access Apple's famously lucrative user base. And as Apple's active user base continues to grow, I expect this sum to only continue to increase in the future.

 

[CarpalMac]

Probably just a reflection of my mentality, but that search engine list above reads more like a notification sound menu!

That sort of amount though makes Eddy Cue's statement seem even more disingenuous.

 

[4odomi]

It's widely known that Apple and Google have a considerable monetary agreement that ensures Google's position as the default search engine on Apple's iOS devices, but neither company reveals the amounts involved. In 2021, financial advisor Bernstein suggested Google was paying Apple as much as $10 billion a year to maintain the status quo. However, in a new investor note, the analyst claims Google's payment to Apple is now between $18 billion and $20 billion.

First reported by The Register, Bernstein published a report assessing the potential implications for Apple of the US government's ongoing antitrust trial against Google, with the Department of Justice considering Google's Information Services Agreement (ISA) with Apple as evidence that it has a search engine monopoly.
Bernstein says Google pays out 22 percent of total ad revenue under its traffic acquisition costs (TAC) and estimates Apple likely receives around 40 percent of this. Bernstein bases its numbers on Apple's public filings as well as a bottom-up analysis of Google's traffic acquisition costs. The DoJ has said in the trial that it thinks Apple receives around $10 billion from the ISA with Google, although its information comes from external sources.
Last month, the trial revealed that Microsoft considered selling its Bing search engine to Apple. Had the acquisition happened, Bing would have replaced Google as the default search engine on Apple devices.

Experts say there is a chance Google could lose the case, which would put Apple's lucrative agreement, which has been in place for a decade, in significant jeopardy. However, a ruling in the case isn't expected before next year, and the likelihood is that proceedings will be extended by the lengthy appeals process.

Article Link: Google Pays Apple $18B to $20B a Year to Be Default iOS Search Engine

It's all guessing by the so called experts, I don't believe Google are paying anywhere near the $10 billion, never mind $18 billion, that sort of money might be realistic, if the users on Apple weren't able to change the default engine, as it stands, google has no guarantees

 

[Steve121178]

Apple is all about the privacy of its users unless money is involved 😆

 

[haruhiko]

If Google thinks that it’s not worth it they will not pay it.

 

[boak]

Next: Apple is sued for only allowing a fixed list of search engines that can be set as default

 

[H2SO4]

It's all guessing by the so called experts, I don't believe Google are paying anywhere near the $10 billion, never mind $18 billion, that sort of money might be realistic, if the users on Apple weren't able to change the default engine, as it stands, google has no guarantees

Do you have ANYTHING at all that you can point to, to make you think otherwise. Not being facetious genuinely wondering.

 

[DFZD]

I am pretty sure EU will sense an opportunity in these numbers and then push for DuckDuckGo.

 

[Gunilla988]

Obviously Google makes more than that from their users.

Actually Google is trying to remain their monopoly strategically, first of all earning from their users. And being on their mind to be used to with google only.

 

[Cunir]

Are people still searching at yahoo?

 

[headlessmike]

Are people still searching at yahoo?

About as many as Bing globally, and about 10x as many as DuckDuckGo.

Source: https://www.similarweb.com/engines/

 

[davie18]

Are people still searching at yahoo?

Yahoo is still huge in japan

 

[fatTribble]

It seems incongruous for a company like Apple that touts privacy to partner with a company like google

 

[klasma]

It's all guessing by the so called experts, I don't believe Google are paying anywhere near the $10 billion, never mind $18 billion, that sort of money might be realistic, if the users on Apple weren't able to change the default engine, as it stands, google has no guarantees

Apple’s John Giannandrea, previously head of Google Search, confirmed in his court testimony that it’s billions.

Over $160 billions of Google’s revenue comes from search ads, so 5% of that doesn’t seem implausible.

 

[fatTribble]

About as many as Bing globally, and about 10x as many as DuckDuckGo.

View attachment 2293043

Source: https://www.similarweb.com/engines/

Awe! I use Ecosia. I’m officially the “Other” 🫠

 

[headlessmike]

It's all guessing by the so called experts, I don't believe Google are paying anywhere near the $10 billion, never mind $18 billion, that sort of money might be realistic, if the users on Apple weren't able to change the default engine, as it stands, google has no guarantees

You overestimate the average internet user if you expect them to be capable of changing the default search engine, even if they wanted to.

 

[iBluetooth]

Apple is all about the privacy of its users unless money is involved 😆

This is not affecting privacy and you can change the search engine in Settings.

 

[klasma]

That’s roughly $14 per iPhone user per year, by the way. Compared to iPhone and Apple services prices, that’s only a minor component of income for Apple.

 

[iBluetooth]

Obviously Google makes more than that from their users.

Actually Google is trying to remain their monopoly strategically, first of all earning from their users. And being on their mind to be used to with google only.

This is a lot of money for maintaining their monopoly, but after seeing that figure $18 billion, I am more convinced that this is a monopolistic behaviour and Google should be split up, to allow more competition in this space.

 

[Smartass]

They should be paying more to Apple, since Google search became total sh*t in last few years.

 

[frou]

You know that statement about consumers:

If you're not paying, then you're the product

Well you can be paying AND be the product, simultaneously

 

[BootsWalking]

Apple knows how valuable our privacy is - that's why they'll only sell it to the highest bidder.

 

[Steve121178]

This is not affecting privacy and you can change the search engine in Settings.

Most people don't hence why it's worth Google paying Apple $18-$20b. They'll get their money back and more otherwise what's the point of paying so much money each year?

 

[5232152]

I am pretty sure EU will sense an opportunity in these numbers and then push for DuckDuckGo.

You obviously know nothing about the European Union and how it protects its citizens by not selling them out for a quick buck. Sadly so.