Google appears to have no problem handing out money to ensure it remains the search engine of choice. Documents demonstrate that the company offers financial incentives to smartphone makers to keep its app store front and center, and pays developers to make their games available on Google Play.
The company also pays Apple a large sum to remain the default in the company’s Safari browser — this year, it’s estimated to be in the order of $15 billion. That number comes from analysts at Bernstein, who expect Google to pay that amount to maintain its status on Apple devices. The amount will likely increase to around $20 billion in 2022.
These estimates are based on patterns found in the latest financial documents available from both companies. And unless something changes significantly over the next year, Google will likely 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 adopts Google as the most popular search engine. And Safari allows the user to switch from Google to another search engine if desired. It appears that Apple and Google have a kind of symbiotic relationship as a result of this deal. Google’s big payout technically falls to Apple’s services division, which has undoubtedly helped Apple grow that revenue stream over the years. This is helpful as the company has diversified its business beyond hardware.
Given that the word “antitrust” is circulating on Google like an errant fruit fly, analysts note that this deal could be considered a regulatory risk. If seen as evidence of Google’s anti-competitive practices, Bernstein analysts estimate it would cost Apple a potential 4-5% reduction in gross revenue. Google may also decide to stop paying Apple altogether, but analysts believe that won’t happen, as Google “is probably paying to make sure Microsoft doesn’t beat the bid.”
Google still gets most of its money from advertising revenue. The company posted a record profit of $61.9 billion, led by the survey, which earned $7 billion on its own. But it’s not clear exactly how much Safari contributes to Google’s bottom line and whether paying Apple billions is really worth it when the alternative is … Bing.