Google is paying a heavy price to be the default iOS search engine
Google is paying a heavy price to be the default search engine on Apple's iOS devices.
Investment firm Bernstein claims in its latest report that Google is paying Apple between $18 billion to $20 billion a year to be the default iOS search engine.
To give this number some context and perspective, it's the equivalent of between14% to 16% of Apple's annual operating profits.
The estimated figure is based on the Information Services Agreement (ISA) between Apple and Google, which is highlighted in the trial asthe U.S. Department of Justice (DOJ) investigatesGoogle for its anticompetitive behaviour.
Google's financial reports reveal it pays about 22% of its total ad revenue on traffic acquisition costs, of which Apple is believed to be receiving about 40%. Considering Google generated $222.47 billion in advertising revenue last year, Apple would then have received about $19.5 billion in 2022.
Since Google (not Apple) is on trial and a ruling is not expected until 2024, the financial impact on the iPhone maker is "unlikely to be onerous". In fact, Apple could benefit from the Google antitrust case and get another search engine provider (e.g. Microsoft's Bing) onboard or even offer its own search engine as a choice screen without attracting the scrutiny of regulators.
Earlier this month, Bloomberg claimed that Apple's own search engine project could be falling into place. While Apple could take years to launch its own search engine, the iPhone maker already has in place a huge search team, an advertising technology team, and a next-generation search engine that could soon see action in its own App Store.
Coupled with an active recruitment of engineers to work on search technologies and its vast financial resources, Apple could find itself at the right time and setting to unveil its search engine when the dust settles between DOJ and Google.
Source: The Register
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