For a very long period of time, Google has been and is the world’s top search engine due to the precise search results it provides. However, it has always been willing to pay for this title and is now set to add $9 billion to the Apple coffers this year in order to remain as iPhone’s default search engine. This estimate was calculated by Rod Hall of Goldman Sachs, who calculated the $9 billion figure based on how many searches Apple users come from Siri or the Safari browser.
This is, however, not a new phenomenon. Many highly regarded analysts have revealed information about Google and it having a past of paying large sums of money to preserve their number one position, especially to Apple. These amounts have only been increasing over the past few years. A respected analyst from Bernstein estimated an amount of $3 million at one time, and this number grew staggeringly to $1 billion in 2013.
Furthermore, the payment in 2019 could be as astronomical as $12 million. But in contrast to this, the Wall Street Journal revealed information in May which hinted towards a slowdown in payment growths made to Apple. However, this is only an estimate, given that both Apple and Google have not released any statements confirming or denying this information.
It is well known that Google pays for each and every iPhone user. BMO Capital Markets estimated that in 2017, there were around 715 million iPhone users. In addition, it is estimated that annually, Google pays around $10 per iPhone user.
Google and Apple have always maintained an intriguing relationship. When the iPhone was first introduced by Apple to the world, it was a very easy decision to utilise Google as the default search engine, due to Google’s reputation as the world’s most powerful search engine.
Although Apple has used Google as its automatic search engine on iOS, they have also made use of the Bing platform in a variety of other places, for example, when searching the web through Siri. This is quite interesting, given Bing wasn’t even a thing until 2009. But Rod Hall has maintained that for Google, Apple still remains one of its biggest sources of gaining traffic.
All this really confirms is that overall, Apple and Google’s relationship remains mutually beneficial. Apple is very much gaining free money and Google still remains as popular as ever among users of Apple devices. This is providing even more growth for Apple, with its hardware sales gaining more and more traction. Applications such as Apple music and iCloud storage are seeing huge progress.
These separate segments of the Apple machine are making their own revenues – services revenue broke $36 billion over the last year, meaning that the company isn’t any longer so dependent upon the sales of their hardware, which can have their peaks and troughs due to changes in demand. In summary, the fact that people are constantly paying for services and product enhancements means it is a continuous win-win situation for Apple.