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Google is paying Apple up to $20 billion a year to support search on iPhone

  • October 11, 2023
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It is widely known that Apple and Google have struck a significant cash deal that will secure Google’s position as the default search engine on Apple’s iOS devices,

Google is paying Apple up to  billion a year to support search on iPhone

It is widely known that Apple and Google have struck a significant cash deal that will secure Google’s position as the default search engine on Apple’s iOS devices, but neither company has disclosed the amount. In 2021, financial advisor Bernstein suggested that Google was paying Apple $10 billion a year to maintain the status quo. But in a new note to investors, the analyst says Google’s payout to Apple is now between $18 billion and $20 billion.

I am informing you for the first time RecordBernstein published a report assessing the potential consequences for Apple of the US government’s ongoing antitrust case against Google; Here, the Justice Department sees Google’s Information Services Agreement (ISA) with Apple as evidence that Apple has a monopoly on search engines.

“We believe there is a possibility that the federal courts will rule against Google and force Google to end its search agreement with Apple,” Bernstein said in a report seen by The Register. said. “We estimate the ISA is worth $18 billion to $20 billion in annual payments from Google to Apple, representing 14 to 16 percent of Apple’s annual operating profits.”

Bernstein says Google pays 22 percent of total ad revenue as part of traffic acquisition costs (TAC), and he estimates Apple probably gets about 40 percent of that. Bernstein bases his figures on a bottom-up analysis of Apple’s public filings as well as Google’s traffic costs. The Justice Department said during the hearing that it believed Apple, along with Google, received approximately $10 billion from the ISA, even though the information came from outside sources.

“Importantly, Google, not Apple, is being sued, and Apple could (theoretically) partner with another default search engine (and/or keep its deal with Google outside the US),” the report said. “Another possible scenario is for Apple to offer a selection screen. We note that Apple controls access to its installed base that generates over ~$60 billion in advertising revenue, and accordingly we believe Apple will continue to charge a fee (25-30 percent) to provide access to this search revenue advertising

“At best, the introduction of a selection screen could give Apple the opportunity to potentially launch its own search engine as an option, something it probably wouldn’t be able to do today without raising regulators’ eyebrows,” Bernstein’s report said. he added.

Experts say there’s a chance Google could lose the case, which could jeopardize Apple’s lucrative decade-long deal. However, the decision on the case is not expected until next year and the trial is likely to continue with a long appeal process.

Source: Port Altele

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