Google has long been a default search on Apple’s iPhone, and in order to keep that from changing, the company is reportedly paying Apple billions of dollar per year.
According to a news report on CNBC.com, citing Wall Street firm Bernstein, Google will pay Apple roughly $3 billion in 2017 to maintain its search position, up from $1 billion a mere three years ago. What’s more, Bernstein said much of Google’s licensing fees make up Apple’s service business.
“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,” Bernstein Analyst A.M. Sacconaghi Jr. said, according to CNBC. “Given that Google payments are nearly all profit for Apple, Google alone may account for 5 percent of Apple’s total operating profits this year and may account for 25 percent of total company OP growth over the last two years.”
The analyst said Google could decide against paying Apple licensing fees if it thinks the search engine is popular enough that Apple won’t use another default search engine. Given Apple’s iPhones account for around 50 percent of Google’s mobile search sales, it may not want to anger Apple in any form, noted the analyst.
Even though Google dominates the search game in the U.S., the company is constantly rolling out features to keep it popular. As a recent example, Google announced news of a new feature to its Google Image Search offering in hopes of further enhancing its product. Available to those with the Google mobile app for Android and mobile web, new badges will start to appear. Through these badges on the mobile app, people will be further assisted in discovering new pieces of information on product searches and other services — such as looking up a recipe — around the internet. A categorization along with action text will be attached to these badges to aid in the visual search process.
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