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

Posted by BeauHD on from the passive-income dept.

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."

13 of 101 comments (clear)

  1. ROI by Anonymous Coward · · Score: 5, Insightful

    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.

    1. Re:ROI by jopsen · · Score: 5, Interesting

      My guess is google is making a nice profit from this... And you don't go around gambling with you golden egg.. Especially, not on the mobil market which is and has been in huge growth..

      If bing got the traffic google has they might be able to improve search results and suddenly google might have a real competitor... That is a HUGE risk, 3B/yr is probably not that bad to offset any chance of real competition.

    2. Re:ROI by MouseR · · Score: 2, Insightful

      It's not a guess when the article states 50% of all Google ad revenues come from iOS.

      Google fucked with Apple, using their privileged early access to the device & SKDs by cloning most aspects of it and try to undercut Apple's new market. They might have the numbers, but they fail at the margin. So they're stuck continuing paying Apple's license in order to monetize.

  2. Pay up, Google by PPH · · Score: 5, Funny

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

    --
    Have gnu, will travel.
    1. Re:Pay up, Google by DontBeAMoran · · Score: 4, Funny

      Of course they won't. We'll all be dead in the middle of Australia.

      --
      #DeleteFacebook
  3. OR by sit1963nz · · Score: 4, Informative

    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.

    1. Re:OR by sd4f · · Score: 2

      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.

    2. Re:OR by drinkypoo · · Score: 2

      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.

      --
      "You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
  4. Re:Seriously by queazocotal · · Score: 2

    They don't want to.
    Anti-trust laws.

  5. Re: Break up Apple by ShanghaiBill · · Score: 3, Informative

    Apple is larger than Microsoft, so why not break up Apple first, and see how it goes?

    Bigness is not a problem in itself. Only abuse of monopoly power. Apple is nowhere close to a monopoly in any market.

  6. Re: Seriously by aberglas · · Score: 2

    What makes you think Bing is crap?

    MS definitely spends real money on it. It has got a lot better.

    And Google is not without its faults. I recently had a website W for which a *different* website X had a bad self signed cert pointing to W. Searches for W ended up pointing to X on Google. Took weeks to sort out. Bing never missed a beat.

    I'd say Google is better if you do side by side searches, but not by much. And I am certainly glad there is some competition.

  7. Re: dump goolagle by Dr.+Evil · · Score: 5, Informative

    "Both yahoo and duckduckgo use bing for search. So the options are only 2 - google and bing"

    Untrue:https://duck.co/help/results/sources

  8. Re:Seriously by Dog-Cow · · Score: 2

    You and the GP are fucking morons. Google is paying Apple. Why the fuck would Apple spend a cent on a replacement?