Published in Mobiles

Google pays Apple billions to stay on iPhone

by on15 August 2017

That's a nice little search engine we would hate for it to be broken

Google is shelling out billions of dollars in protection to the fruity tax-dodging cult Apple so that it can stay the default search engine on iPhones and iPads.

The market watcher outfit Bernstein found the payments which it thinks are worth about $3 billion this year, up from $1 billion just three years ago and that Google's licensing fees make up a large bulk of Apple's services business.

Apple has been touting its services business as a quickly growing segment of the company, noting that it expects that branch alone will soon be as large as a Fortune 500 company.

Bernstein analyst A.M. Sacconaghi Jr. said: "Court documents indicate that Google paid Apple $1 billion in 2014, and we estimate that total Google payments to Apple in FY 17 may approach $3 billion.

"Given that Google payments are nearly all profit for Apple, Google alone may account for five per cent of Apple's total operating profits this year, and may account for 25 per cent of total company OP growth over the last two years."

Sacconaghi said that Google might decide to back away from paying Apple any licensing fees if it feels confident enough that its search engine is so popular Apple won't include any other option by default.

On the other hand, Sacconaghi said that Apple's iOS devices contribute about 50 percent to Google's mobile search revenue, which means Google might be too afraid to walk away from its licensing deal with Apple. In this case, it's a win-win for Apple and Google.


Last modified on 15 August 2017
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