Google and Apple have been competing for as long as we can remember. I mean, just look at the iOS vs Android debate that has not died down and will probably not, considering how both companies need each other to survive in the market so there can be more innovation. Now, it should not be a surprise that Apple charges a lot of money just so the search engine could be a default on iPhones, but we now know that "a lot" of money is actually way more than any of us would have imagined.
Google is paying Apples upwards of $20 billion every year just so it can remain the default search engine on iPhones
According to a new report, Google pays Apple anywhere between $18 billion to $20 billion just so it can remain the default or dominant search engine on the iPhones. This comment was made in the context of an Information Services Agreement between Apple and Google that the U.S. Department of Justice is investigating at the time of writing.
The said report also mentions that there's a chance that the federal court will rule against Google, and if that happens, the deal with Apple will also be terminated. The said deal accounts for 14 to 16% of annual operating profits for Apple. Looking at the financial report of the search engine giant, you see that the company pays 22% of its total ad revenue on traffic acquisition costs. From this 22%, Apple receives 40%. When doing the math, you realize that Apple is getting 8.8% of total ad revenue that Google generates.
No matter which side you are on in this whole debate, the point is simple that Apple is charging a lot of money. Which makes sense from Apple's perspective, as well. It is only one of the biggest smartphone companies and have a lot of market share, as well. Now, Google Search is a default search engine on almost all the Android devices, and being default search engine on Apple is just a cherry on top. So, while it does pay Apple a ridiculous amount of money, it is safe to say that it is more of an investment than anything else.
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