Google Paid $7.2 Billion Last Year To Partners, Including Apple, To Prominently Showcase Its Search Engine and Apps on Smartphones (bloomberg.com)

A reader shares a Bloomberg report: There's a $19 billion black box inside Google. That's the yearly amount Google pays to companies that help generate its advertising sales, from the websites lined with Google-served ads to Apple and others that plant Google's search box or apps in prominent spots. Investors are obsessed with this money, called traffic acquisition costs, and they're particularly worried about the growing slice of those payments going to Apple and Google's Android allies. That chunk of fees now amounts to 11 percent of revenue for Google's internet properties. The figure was 7 percent in 2012. These Google traffic fees are the result of contractual arrangements parent company Alphabet makes to ensure its dominance. The company pays Apple to make Google the built-in option for web searches on Apple's Safari browsers for Mac computers, iPhones and other places. Google also pays companies that make Android smartphones and the phone companies that sell those phones to make sure its search box is front and center and to ensure its apps such as YouTube and Chrome are included in smartphones. In the last year, Google has paid these partners $7.2 billion, more than three times the comparable cost in 2012.

Comments

Interesting to know ...

[CaptainDork]

... and very informative, but not earth-shattering.

Sounds like a good business model for all concerned, except Google competitors.

Those companies could pony up if they think there's a decent ROI.

How is this not good news?

[xxxJonBoyxxx]

More money flowing out of Google (which receives advertiser revenue) and into device/content providers (the ones that actually provide the things we want). I can understand how Google investors are getting worried about tightening profit margins, but how is this not a high-five for consumers?

Re:So all of you asking where the evidence is

[TheRaven64]

It's a bit borderline. You can't afford to pay Apple $2bn to be the default search engine unless you're already a huge company, and it's hard to grow to being a huge search engine company if someone else is the default on all of the popular platforms. It's not completely clear whether this extends beyond the normal sort of barrier to entry for an established market or whether it's prohibitive to new entrants (which would mean that you no longer have a functioning market).