Google is paying Apple an estimated $3 billion to remain as the default search engine on the iPhone and iPad. The information has been revealed by Bernstein, US-based research and brokerage firm. Based on that rough estimate, Google may account for 5 per cent of Apple’s total operating profits this year.
Based on that rough estimate, Google may account for 5 per cent of Apple’s total operating profits this year. The payment is described as “nearly all profit for Apple.”In fact, in its recent earnings, Apple has been highlighting the performance of its services business. The tech giant expects the services business alone would soon be as large as a Fortune 500 company.
The research firm says Google might be hesitant to drop the licensing deal. That’s because there are millions of Apple devices in the market, they contribute around 50 per cent of Google’s search revenue on mobile. While it is being estimated that Google will pay around $3 billion to Apple this year, the last known stat were actually revealed in 2014, when Google paid Apple $1 billion. Thanks to court documents, it was revealed that Google paid Apple a hefty amount to retain the default search engine on the iPhone and iPad.
“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,” CNBC quoted Bernstein analyst A.M. Sacconaghi Jr.
“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,” he added.