14 DAY TRIAL // Google will pay Apple up to $3 billion every year to remain the default search engine on iOS devices thanks to an increase in iPhone and iPad sales since the original agreement in 2014.
Three years ago, Google and Apple signed a $1 billion per year deal, as the Mountain View-based company wanted to power the search feature in Safari, but following the growing sales and market share recorded by Apple’s devices, the figure is expected to reach $3 billion this year.
The estimate comes from analyst firm Bernstein, which explained in a note to investors that Google is very likely to be forced to pay more than before to remain the default search engine in Safari.
“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,” Bernstein analyst A.M. Sacconaghi Jr. was quoted as saying.
“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.”
Google could walk away from the deal
The analyst continues by adding that Google could very well not agree with paying that much to Apple, but only if the company believes that Cupertino wouldn’t have any other option in the case of search engines given how popular Google is.
But this could prove to be a double-edged sword for Google, as Apple has already sided with Microsoft for powering the search capabilities of Siri. The digital assistant uses Microsoft’s Bing for search features, and although search in Safari is powered by Google, Apple could very well switch sides should it be forced to.
Right now, Apple’s iOS devices generate no less than 50 percent of Google’s mobile search revenue, so it’s pretty clear that the search company does not afford to walk away from this deal. It remains to be seen if a $3 billion agreement is reached, but with iOS 11 and new iPhones just around the corner, Apple has every reason to pressure its rival for more money.