Google Paid Apple $1 Billion To Be iPhone's Main Search Engine
Google has been paying big bucks to secure its place as the default search engine on Apple iPhones. Indeed, the search engine giant shelled out a whopping $1 billion in 2014 to maintain a starring role on the iconic device's search bar. That figure, according to Bloomberg Business reporters, is based on a transcript of court proceedings from Oracle's ongoing copyright lawsuit against Google.
Court documents from the case [Oracle America Inc. v. Google Inc., 10-cv-03561, U.S. District Court, Northern District of California (San Francisco)] reveal the Android operating system maker has had an ongoing revenue-sharing agreement with Apple. Google reportedly pays Apple some unknown percentage of the revenue it tallies through searches conducted via Google.com on iPhones. That revelation is according to an Oracle attorney's statement last week, at a Jan. 14 federal court hearing.
As part of the deal, when iPhone users open the Safari mobile app on iOS and tap the address bar, Google’s search engine appears by default. While the latest versions of the iOS mobile operating system allow users to change the default search engine to Yahoo, Microsoft Bing, or DuckDuckGo, that option is not obvious to many users.
Greg Sterling, vice president of strategy and insight for the Local Search Association, told us there was speculation for several years that Google was paying significant money to Apple to secure its default position on the mobile Safari browser.
"Several financial firms guessed the number was around $1 billion in 2013 and 2014," Sterling said. "However, if some of the estimates circulating about Google mobile ad revenue are accurate, and there is a revenue share as the court documents assert, Apple is probably getting more than a $1 billion from Google. It could be a good deal more."
Neither Apple nor Google could immediately be reached for comment, but Bloomberg writers Joel Rosenblatt and Adam Satariano offer some perspective on the story, which they broke last night:
"The revenue-sharing agreement reveals the lengths Google must go to keep people using its search tool on mobile devices," they write. "It also shows how Apple benefits financially from Google’s advertising-based business model that Chief Executive Officer Tim Cook has criticized as an intrusion of privacy."
The Value of Apple
Clearly, Google knows what's at stake. About a year ago, the company offered research revealing more Google searches take place on mobile devices than on computers in 10 countries, including the U.S. and Japan.
Google’s "Mobile Path to Purchase" report reveals consumers spend at least 15 hours a week researching on their smartphones. Mobile research starts with search, and in turn, search drives advertising revenues, which are vital to Google’s fortunes. Although details of the Apple-Google mobile search agreement are hush-hush, it's clear that both companies are seeing dividends. If Apple is getting $1 billion, imagine how much Google is getting.
"The question now is whether that agreement, which reportedly was up for renewal last year, has been renewed. Nothing appears to have changed, so a safe assumption is that it was [renewed]," Sterling said. "While $1 billion is not a lot of money for either Google or Apple, it shows the value of being in that default position as Safari's search engine."
Posted: 2016-01-25 @ 12:27am PT
This is a huge amount but google will collect much more than it paid to Apple.