It’s long been known that Google pays Apple a substantial money each year to keep its search engine as the default on iPhone, iPad, and Mac. According to a new projection from Bernstein analysts, Google’s payment to Apple might reach $15 billion in 2021, up from $10 billion in 2020.
According to Bernstein analysts, Google’s payment to Apple will rise to $15 billion in 2021 and between $18 billion and $20 billion in 2022, according to the investor note viewed by Ped30. The information comes from “disclosures in Apple’s public filings as well as a bottom-up investigation of Google’s TAC (traffic acquisition costs) payments,” according to the report.
Google is likely “paying to ensure Microsoft doesn’t outbid it,” according to Bernstein analyst Toni Sacconaghi. According to the analysts, there are two major dangers for Google’s payment to Apple: regulatory risk and Google just deciding the deal isn’t worth it:
We see two potential risks to GOOGLE’s payments to AAPL: (1) a regulatory risk, which we believe is real but years away; an adverse ruling could have a 4-5 percent impact on Apple’s gross profits; and (2) Google decides to stop paying Apple to be the default search engine entirely, or renegotiates terms and pays less. In previous research, we found that GOOGLE is likely paying to ensure that Microsoft does not outbid it. With payments expected to reach $18–$20 billion in FY 22, it’s not out of the question that Google reconsiders its policy.
Over the years, Apple’s decision to keep Google as the default search engine on the iPhone, iPad, and Mac has been received with increasing criticism. Despite privacy concerns, Apple’s senior director of global privacy Jane Horvath explained why the contract was made in an interview earlier this year:
Google is currently the most popular search engine. We support Google, but we also have built-in support for DuckDuckGo and Ecosia, which we recently added.
The payment from Google to Apple makes up a sizable portion of Apple’s crucial Services division. Apple has placed a strong emphasis on Services in recent years to demonstrate to investors that it can generate income and profit in ways other than through hardware sales.
What are your thoughts on Apple’s deal with Google to make Google the default search engine on the iPhone, iPad, and Mac? Let us know in the comments section!
