Google pays Apple $15 billion to remain the exclusive search engine on iPhones, iPads
It seems that being the most popular search engine in the world comes at a cost. A recent report from analysts at Bernstein claims that Google may have to raise the bar and pay a whopping $15 billion to Apple to keep on being the default search engine on Apple’s most popular devices.
According to an investor note seen by the guys over at Ped30, analysts from Bernstein have estimated that Google will have to pay $15 billion to keep on being the default search engine installed in iPhones, iPads, and Macs. This information is based on “disclosures in Apple’s public filings as well as a bottom-up analysis of Google’s TAC payments.” Further, they believe that next year’s payment may reach between $18 and $20 billion.
Now, these numbers seem quite impressive, even more so when you consider that Google may have paid around $9 billion in 2018 and $10 billion in 2020. But according to Bernstein analyst Toni Sacconaghi, the main reason why these numbers are on the rise is that Google may be “paying to ensure Microsoft doesn’t outbid it.” However, he also mentions two potential risks for these payments, which include regulatory risks and that Google may decide that this deal is no longer worth it.
“We see two potential risks to GOOG’s payments to AAPL: (1) regulatory risk, which we believe is real, but likely years away; we see a potential 4-5% impact to Apple’s gross profits from an adverse ruling; & (2) that Google chooses to stop paying Apple to be the default search engine altogether, or looks to renegotiate terms and pay less. We have noted in prior research that GOOG is likely paying to ensure Microsoft doesn’t outbid it. That said, with payments likely to approach $18 – $20B in FY 22, it not implausible that Google could revisit its strategy.”
A former bilingual teacher that left the classrooms to join the team of Pocketnow as a news editor and content creator for the Spanish audience. An artist by nature who enjoys video games, guitars, action figures, cooking, painting, drawing and good music.