Apple gets 36% of Google's search ad revenue at Safari

2023

Apple gets 36% of Google's search ad revenue at Safari

On November 13, 2023, it became known that Google it pays Apple more than a third of its income from the placement of search advertising in - browser Safari 36%. Alphabet Google and parent company CEO Sundar Pichai confirmed the figure.

Information about payments in favor of Apple was disclosed by Kevin Murphy, Alphabet's chief economic expert and professor at the University of Chicago. His statements were made during a hearing in Washington on the antitrust lawsuit of the US Department of Justice and several US states against Google.

Google pays Apple more than a third of its revenue from placing search ads in Safari browser

It is noted that information about the financial terms of the agreement between Google and Apple should have remained confidential. In particular, Google stated that the disclosure of relevant information "unreasonably undermine Google's competitive position towards both competitors and other counterparties." The parties entered into a partnership agreement in 2002: under the terms of the contract, Google is the default search engine in Apple Safari. This is one of the most important agreements for Google, since thanks to it, the company's search engine is used by default in iPhones - the most popular smartphones in the United States.

Pichai commented on Murphy's testimony as part of a hearing in another case against Google, initiated by Epic Games, the creator of Fortnite. Asked whether the numbers provided by Murphy were accurate, the Google chief said they were correct. At the same time, Pichai also said that Google pays Apple "more than $10 billion." At the same time, Bernstein analyst Toni Sacconaghi estimated that in 2023 alone, Apple's revenue from a search agreement with Google will amount to approximately $19 billion. It is the default search agreement with Apple that is the main subject of antitrust proceedings against Google.^[1]

Google paid $26.3 billion to OS manufacturers for the year so that its search engine was the default in smartphones and computers

At the end of October 2023, it became known that Google, part of the Alphabet holding, is spending tens of billions of dollars to ensure that its search engine is used by default on personal computers and smartphones. In 2021 alone, $26.3 billion was allocated for the corresponding purposes. Read more here.

How much Google pays Apple to keep the search engine on the iPhone

Google Corporation pays Apple at least $18 billion a year for its search to be used by default on iPhone smartphones. Such figures are provided in an analytical report by Bernstein, which was released on October 9, 2023.

The fact that Google transfers billions of dollars to Apple for using its default search in iOS became known in 2018: then it was said that the amount of payments amounted to about $9 billion. In 2020, information appeared that the amount of such costs reached $12 billion. According to Bernstein estimates, as of 2023, payments range from $18 billion to $20 billion, which is 14-16% of Apple's annual operating profit.

The information that Google pays Apple billions of dollars a year for the corporation's search engine to be the default in the iPhone was also confirmed by Apple top manager Eddie Cue during a meeting as part of the antitrust process between the US Department of Justice and Google.

We made Google the default search engine because we always thought it was the best. We choose the most suitable option, but at the same time provide users with the opportunity to change the search engine at their discretion, - said Kew.

A top Apple executive also commented on why the company does not provide the ability to change the default search engine when the iPhone is first turned on. This is done to simplify the initial setup process and allow users to get to work as quickly as possible, Kew said. At the same time, many experts agree that Google may lose antitrust proceedings with the Department of Justice, and therefore the agreement with Apple to use search by default will have to be broken.^[2]

2020: Google pays Apple $12bn a year for its iPhone search engine

Google pays Apple from $8 billion to $12 billion to have its search engine run by default in iOS devices. This is stated in the lawsuit, which the US Department of Justice filed with Google in October 2020.

Apple CEO Tim Cook and Google chief Sundar Pichai met in 2018 to discuss the deal, the department said. After this meeting, an anonymous senior Apple employee wrote to his colleague from Google that "our vision is that we work as if we were one company," the Ministry of Justice said.

Google pays Apple $12 billion a year for its iPhone search engine

The lawsuit cites a Google document that called the Apple deal a "significant source of revenue," the loss of which would have hit the business of the American Internet corporation hard. This is due to the fact that, according to Google, almost half of its search traffic in 2019 came from Apple devices, according to the statement of claim.

While the Justice Department acknowledged the ability to change the default search engine on phones, it said only a handful of users do, making Google an "exclusive" search engine and putting smaller competitors at a disadvantage.

Apple said the company does not block the use of third-party search engines, as does transitions to their sites from mobile devices manufactured under the company's brand.

According to Bloomberg, Apple reports cash receipts from Google under the article "services": revenue on this item has been steadily growing in recent years, the news agency notes.

Bernstein analyst Toni Sacconaghi estimates that every year Google pays Apple from $7 billion to $8 billion to make its search engine the default operating system in iOS and voice assistant. Siri This amount corresponds dollars to about 30% of the 25 billion in revenue that Google receives from advertising on Apple devices. Although the companies themselves have not disclosed the amount of payments, the analyst claims that his data is close to real.^[3]

2018: Google pays Apple billions to remain default search engine in Safari browser for iOS devices

At the end of September 2018, a Goldman Sachs note named the highest previously heard estimate regarding Google's payments to Apple for the right to remain the default search engine in its browser for Safari iOS devices. According to investment bank analyst Rod Hall, Google will pay Apple $9 billion in 2018.

The companies themselves have not disclosed the details of their collaboration, but most experts agree that Google's Traffic Acquisitions Costs (TAC) are worth billions of dollars a year.

Google's presence in Safari as default search engine costs internet giant billions of dollars a year

Earlier, from court documents released by Google as part of a lawsuit with Oracle over the use of Java code in Android, it became known that in 2014 Google gave $1 billion for the right to be the default search engine in the mobile version of Safari.

In 2017, Bernstein analyst Toni Sacconaghi reported $3 billion.

Referring to last year's statement by Google that the corporation had revised the terms of the agreement regarding traffic attraction, Goldman Sachs concluded that Apple's payments had increased.

We believe that the fee is calculated in proportion to the number of searches that users of Apple devices made using the Siri voice assistant or the Safari browser, the note says, excerpts from which are published by Business Insider. It is also noted that Apple is one of the largest sources of traffic attraction for Google.

Goldman Sachs believes that $9 billion is far from the limit, and in 2019 the amount may increase to $12 billion.

Rod Hall also claims that Google's deductions help Apple grow revenue in the Services category. So, in the past, Apple's turnover in this direction amounted to $31.3 billion, and 24% of this amount was provided by payments to the search giant, and another 17% was accounted for by the AppleCare service program.^[4]

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