October 18, 2021

Google Will Continue to Pay Apple Billions to Keep You From Using… Bing? – Gizmodo

https://gizmodo.com/google-will-continue-to-pay-apple-billions-to-keep-you-1847564608

A photo of the iPhone with the Safari browser pointed to the Google search page

It’s no surprise it’s so convenient to “Google” something in mobile Safari.
Photo: Caitlin McGarry / Gizmodo

Google seems to have no problem doling out cash to ensure it remains the search engine of choice. Documents have shown the company offers financial incentives to smartphone manufacturers to keep its app store front and center, and it pays developers to offer their games in Google Play. The company also pays Apple a hefty sum to remain the default in the company’s Safari browser—this year, it’s estimated to be about $15 billion.

That number comes from Bernstein analysts, who expect Google will fork over that much to retain its status on Apple devices. The amount is likely to increase to about $20 billion in 2022. Those estimates are based on patterns found in the latest available financial documents from both companies. And unless something changes significantly in the next year, Google is likely to continue to pay many billions to stay front and center for iOS users.

Jane Horvath, Apple’s senior director of global privacy, said earlier this year that the company defaults to Google because it’s the most popular search engine. And Safari allows you to switch from Google to another search engine if you choose.

It seems Apple and Google have a sort of symbiotic relationship as a result of this deal. The big payout from Google technically falls under Apple’s Services division, which has undoubtedly helped Apple increase that revenue line over the years. That’s helpful, as the company has diversified its business beyond hardware.

Considering the word “antitrust” is floating around Google like an errant fruit fly, analysts note this arrangement could be considered a regulatory risk. If it’s seen as evidence of Google’s anti-competitive practices, Bernstein analysts estimate it would cost Apple a potential 4-5% decrease in gross revenue. Google could also decide to stop paying Apple altogether, but analysts believe that won’t happen as Google “is likely paying to ensure Microsoft doesn’t outbid it.”

Google still makes a majority of its cash from advertising revenue. The company posted a record $61.9 billion in profit, led by search, which made $7 billion on its own. But it’s unclear exactly how much Safari contributes to Google’s bottom line, and whether paying Apple billions is really worth it when the alternative is… Bing.

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