Google needs to pay Apple a small fortune to remain the default search engine on iOS

Apple and Google could be the greatest frenemies in tech. While the two of them, as it would compete’s no tomorrow, you also have partners on some very special offers. For example, Google has a lot of pays money in order to continue the default search engine for iOS.

As CNBC first reported, according to a Bernstein analyst, Google as much as $3 billion could pay for a year, only the default option in Safari.Business Insider reached also, Bernstein report, and together the thinking behind this number. Bernstein analyst Toni Sacconaghi starts from a previous court document from the year 2014, said that Google had to pay $1 billion each year, the default search engine on iOS remain in the year 2014.

But for the mobile data traffic as well as the iPhone sales have grown steadily since then. When Apple’s sales in the service sector, in particular license revenues, as well as Google’s traffic acquisition costs, the number could be around $3 billion now.

It shows that Google is still very dependent on Apple. The vast majority of Google revenue from ads on the search result pages. And Apple controls about 18 percent of the smartphone market.

Since most users update to the latest version of iOS in just a couple of months, it doesn’t take long to change the default setting, the hundreds of millions of iPhones. Google has no choice but to make a ton of money to spend to acquire traffic.

A few years ago, the iPhone shipped with a built-in YouTube app and Google Maps. When Apple realized that Google become a serious competitor with Android, the company has removed the YouTube app from iOS and worked on Apple Maps. Apple is not afraid to Google to say no, when it comes to the iOS functions.

Apple could probably get as much money from Microsoft Bing, Yahoo Search, or DuckDuckGo, but Apple don’t really need it anyway, since more than 45 billion dollars in revenue it brings per quarter now. It is all to hurt Google’s bottom line.

As John Gruber noted, Apple is in a strong position in these negotiations. While it is true that DuckDuckGo, and Bing has become better over the years, it is to lag, if you with the search engines in non-English languages.

This incongruent situation is a great example for asynchronous competition. Apple and Google are Innovation and competition as hard as you can on the smartphone. But also a partner on other aspects, and even pay each other. Business schools will turn this situation into a great case study.

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