Google to pay $3bn to Apple to stay on the iPhone
Securities firm Bernstein told investors that Google will have to pay billions to Apple to remain the default search engine
Google is reportedly paying Apple billions of dollars to stay as the default search engine on iPhones and iPads, according to security firm Bernstein.
In a note to investors, Bernstein revealed that Google will pay $3bn this year to Apple, which is believed to be tripled the amount compared to three years ago for the same licensing rights.
According to Apple, the revenue from Google is counted towards its quickly growing services business, which Apple believes that this segment alone could qualify for a Fortune 500 company.
Bernstein analyst A.M. Sacconaghi Jr, said to investors that the high licensing fee could potentially result in Google deciding not to pay the fee. Furthermore Google may feel confident to do this as the popularity of the search engine could mean Apple will not include any other option.
Despite this Sacconaghi states that Apple's iOS devices provide 50% to Google's mobile search revenue.
"Court documents indicate that Google paid Apple $1B in 2014, and we estimate that total Google payments to Apple in FY 17 may approach $3B. Given that Google payments are nearly all profit for Apple, Google alone may account for 5% of Apple's total operating profits this year, and may account for 25% of total company OP growth over the last two years," said A.M. Sacconaghi Jr., analyst, Bernstein.