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Google pays billions a year to be the default iPhone search option

By Jules Wang August 15, 2017, 3:07 pm

Research from financial firm Bernstein points out Google to be one of the reasons why Apple’s services revenue has exploded in recent years.

Business Insider has obtained a note from Toni Sacconaghi that comes to the conclusion that Google will pay up to $3 billion this year to remain as the preferred search engine for the iPhone and iPad.

The figure is based off of several factors dug up from media reports and balance sheets:

  • The contract rate that Apple retains from Google traffic revenue from iOS was “at one point” 34 percent. Subsequent rates could be lower.
  • Google gave Apple $1 billion in 2014.
  • High street firms estimate Google’s total mobile revenues to have more than tripled in three years from $16 billion in 2014 to $50 billion this year.
  • This corresponds with increases is Apple’s licensing earnings in its Services category and Google’s reported Traffic Acquisition Costs.

The general math amounts to either side of $3 billion this year and, if all factors are constant, a yearly fee increase of $1 billion.

Apple is looking to double its 2016 service revenue figure by 2020. Bernstein believes that Infinite Loop can achieve that very easily with default application licensing.

“[…] think Uber (vs. Lyft) or Amazon (vs. Jet) or Facebook (vs. Snapchat/Twitter) or Google Maps (vs. Mapquest) or WeChat (vs. Line) or Netflix (vs. Hulu),” Sacconaghi wrote.

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