Google could pay a whopping $15 billion to remain the default search provider on iPhone and iPad, according to one analyst. The figure could rise even higher, to as much as $20 billion, in 2022.
It is believed Google is willing to pay so much to ensure Microsoft and Yahoo, which may also be interesting in striking a deal with Apple, cannot break up the partnership Google has enjoyed for more than a decade.
Google wasn’t chosen as the default search provider in iOS and iPadOS simply because it’s the most popular search engine. It coughs up an increasingly significant sum to secure that status every year.
And it’s only going to get more expensive, according to Toni Sacconaghi, a financial analyst with Bernstein.
Google wants to remain first for search on iPhone
“We now estimate that Google’s payments to AAPL to be the default search engine on iOS were $10B in FY 20, higher than our prior published model estimate of $8B,” Sacconaghi wrote in a note to investors, via Ped30.
“We now forecast that Google’s payments to Apple might be nearly $15B in FY 21.” That’s around 9% of the company’s gross profits, and it would ensure a significant increase in the growth of Apple’s Services business.
Google is likely willing to pay such sums “to ensure Microsoft doesn’t outbid it,” Sacconaghi added. But it’s “not implausible” that Google could rethink its strategy later, with payments likely to reach $18-20 billion in 2022.
Regulators could step in
The note also warns that Google’s agreement with Apple is at risk of regulatory interference. As the fee becomes more and more significant, it’s not unlikely that regulators could step in to break up the deal.
But this is “likely years away,” Sacconaghi added, so it’s likely Apple will continue to enjoy the payments for now.
