Google pays Apple around $1 billion a year to be the default search engine on iOS, according to Morgan Stanley analyst Scott Devitt, and that figure is going to rise in the years ahead. That’s more than a lot of companies turn over in a year, and Apple banks it for doing literally nothing.
Apple and Google have a “per-device” deal rather than a revenue sharing deal, according to Devitt’s report, titled “The Next Google Is Google.” So for every $1 of search revenue Google makes on iOS, Apple gets 75 cents. This is to simplify accounting and allows Apple to collect its payment up-front.
This year, that will equate to around $1 billion. That doesn’t seem like much when you consider Apple made more than $13 billion in profit during the last quarter alone, but it’s a pretty hefty sum just for making Google the default search provider on iOS. Furthermore, the figure is only going to rise in the years ahead.
It’s a good deal for Google, too, according to Devitt. When you consider that iOS — along with Google’s Android — are dominating the mobile market, paying around $1 billion a year for a monopoly on the most lucrative online business in the world is nothing. I’m sure Google makes it back pretty quickly.