Google pays Apple between $ 18 and $20 billion a year to be the default iOS search engine .
The two companies have a significant monetary agreement that secures Google's position as the default search engine on Apple's iOS devices, but neither company discloses the amounts involved. In 2021, financial consultant Bernstein suggested that Google would pay Apple up to $10 billion a year to maintain the status quo. However, the analyst claims that this payment is between $18 billion and $20 billion.
According to The Register, Bernstein presented an assessment of the potential impact on Apple of the unfolding antitrust case against Google being brought by the United States government. The Justice Department is examining the two companies' Information Services Agreement (ISA) as evidence to support its claim that Google has a monopoly on search engines.
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“There is a possibility that federal judges could convict Google and force it to terminate the agreement with Apple,” Bernstein said in report , seen by The Register. “We estimate that the ISA is worth $18 billion to $20 billion annually in payments from Google to Apple, representing 14-16% of Apple’s annual operating profits.”
According to Bernstein, Google spends 22% of its total advertising revenue on traffic acquisition costs (TAC), while he estimates that Apple probably earns about 40% of that. Bernstein bases figures on Apple’s public filings, as well as an analysis of Google’s traffic acquisition costs. During the trial, the Justice Department said it estimates that Apple earns about $10 billion from the ISA with Google, although this information comes from external sources.
In theory, Apple could partner with another search engine as the default, and/or maintain the deal with Google outside the US. One possible scenario is that Apple would offer a choice screen. We emphasize that Apple has control over access to its installed base, from which approximately $60 billion in ad revenue comes. Accordingly, we believe that Apple will continue to earn a percentage of this revenue (in the range of 25-30%) for providing access to this search ad revenue.”
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Additionally, introducing a choice screen could provide Apple with the opportunity to launch its own search engine as an alternative – something it likely couldn’t do right now without raising concerns with regulators, according to the Bernstein report.
Last month, it was reported that Microsoft was considering selling its Bing search engine to Apple. If the acquisition had gone through, Bing would have replaced Google as the default search engine on Apple devices.
Experts say there is a chance Google could lose the case, which would jeopardize Apple's lucrative deal . However, a decision on the case is expected next year and the process is likely to be extended several times.
Source: macrumors.com
