Securities firm Bernstein sent a note to clients today, stating that Google will end up paying approximately $3 billion to Apple this year to remain the default search engine on the Apple iPhone and Apple iPad. That is triple the amount that Google paid Apple three years ago for the same licensing rights.
The revenue from Google is counted by Apple towards its rapidly growing services business. According to Apple, if its service business was considered a separate company, it would qualify for the Fortune 500.
Google will pay a whopping $3 billion to Apple to remain the default search engine on the iPhone and iPad, securities firm Bernstein has sent a note to the clients.
The amount paid by Google is thrice the sum that the company paid to the Cupertino Company three years back for the same licensing right. The revenue from Google is counted by Apple towards the growth of the business.
Bernstein analyst A.M. Sacconaghi Jr. said in his firm's message to investors that by asking for such a high licensing fee, Apple could end up turning Google away altogether.
A.M. Sacconaghi Jr further stated that he wonders what point Google decides not to pay a dime to Apple, and counts on the popularity of its search engine to prevent Apple from including another option by default.
At present, iPhone and iPad users can change the default search engine by clicking on Safari under the Settings option. Google earns 50% of its mobile search revenue from iOS devices.
"Court documents indicate that Google paid Apple $1B in 2014, and we estimate that total Google payments to Apple in FY 17 may approach $3B. 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."-A.M. Sacconaghi Jr., analyst, Bernstein
Right from the first day, Google has been the default search engine on iPhones. Even YouTube and Google Maps were a part of the iPhone until iOS 6 when Apple left them behind.
Google replaced both with new iOS apps available for free from the App Store, and Apple Maps replaced Google Maps as the default mapping application on the iPhone and iPad.