According to financial and business news website Business Insider, Google may pay Apple over $9 billion for the latter to keep Google’s search engine as the default search engine for the Safari browser on iOS.
According to analyst Rod Hall – the author of the article – the number will continue to grow over time, potentially reaching $12 billion in 2019.
This Isn’t New
Neither companies have even spoken publicly about the agreement, but analysts seem to be certain there is an accord between the two parties and that payments are in the billions.
How long has Google been paying Apple? As far back as 2014 at least, when the search giant was thought to have paid a billion dollars to the Cupertino based company. In 2017, reports surfaced that the sum exchanged between the companies had crossed $3 billion.
And since it’s practically all profit, it can be estimated that the sum accounted for as much as 5% of Apple’s total operating profit for the year.
Google files this expense under traffic acquisition costs, or TAC, money that goes towards driving visitors to the search engine. Hall noted that “Apple is one of the biggest channels of traffic acquisition for Google.”
The sharp increase in price can be justified by the fact that, as the number of active iOS devices keeps increasing, so will Apple’s asking price. Secondly, facing market saturation, Apple is expected to focus more on services to sustain its growth, meaning that it will start increasing the price of such assets.