Google Pays Apple $1 Billion A Year To Be Default Search Engine on iOS


It’s no secret that Apple hates Google, so why is it that the latter always seems to worm its way into being the default search engine on iOS devices? Because money talks, that’s why, and this is especially true if you’re in a position to throw around as much of it as Google can.

For all their regular bickering, it seem that Apple is more than ready to kiss and make up each time Google agrees to get its wallet out. And that’s hardly a surprise, for even the most bitter of enemies can’t afford to turn their nose up at $1 billion a year, which is reportedly the amount that Google tips Apple to power search for its mobile devices.

Neither company has admitted as much of course, but this was the estimate reached by Morgan Stanley analyst Scott Devitt, as part of his research aimed at showing us all why Google is such a great prospect for investors given the potential for growth within its already massive search business.

For sure, we all know that Google makes millions from search, but what’s interesting is the staggering amount of money that it pays out for what Devitt terms “traffic acquisition” – basically by paying companies like Apple to help it retain its status as the world’s number one search engine.

Devitt estimates that Google will pay around $1 billion to remain the default search provider on iPhones, iPads and iPods during 2014, which amounts to almost 31% of its total traffic acquisition costs. Mozilla will also benefit from Google’s largesse, receiving about $400 million over the same period in return for willfully exposing its users to the risk of being “Scroogled”. In addition, Google is expected to shell out another $3.5 billion or so to become the default search provider in a range of third-party software products.

It’s an interesting tactic from Google that underscores not only how difficult it is for rival search engines like Bing to compete, but also the internet giant’s determination to snuff out all forms of competition. Google’s investment more than pays for itself too. Not only does it control 95% of mobile search markets and the consequent massive audience for its mobile ad campaigns, but it also gets a ton of valuable mobile data which it can use to refine them to become even more profitable – ensuring that rival search engines are left well and truly out in the cold.

And for Apple? It gets a cool $1 billion for doing absolutely nothing – an amount that could rise to $6.8 billion a year by the end of the decade, according to Devitt.