The amount is reportedly three times higher than what Google paid Apple in 2014 for the same privilege
It looks like Google is about to pay Apple $3 billion to remain as the default search engine on iOS. According to a report by CNBC, American brokerage and research firm, Bernstein notes the this amount is three times higher than the amount Google paid the Cupertino-based company in 2014 for the same. Bernstein also adds in its investor notes that Google’s licensing fees makes up a large portion of Apple’s services business.
“Court documents indicate that Google paid Apple $1B in 2014, and we estimate that total Google payments to Apple in FY 17 may approach $3B,” Bernstein analyst A.M Sacconaghi Jr. was quoted as saying. “Given that Google payments are nearly all profit for Apple, Google alone may account for five per cent of Apple's total operating profits this year, and may account for 25 per cent of total company OP growth over the last two years,” he added.
Sacconaghi says that Google might choose not to pay Apple any licensing fee if it feels confident enough in the popularity of its search engine. That would mean that Apple would have no other choice but to include it as the default search engine option anyway. He also notes that iOS devices contribute nearly 50 percent of Google’s mobile search revenues. It’s possible that it might be too risky for Google to walk away from such a deal.
Apple is preparing to launch its 2017 line up of iPhones in the coming months and reports suggest that the company may launch as many as three this year. Thess include the iPhone 7s, iPhone 7s Plus, and a tenth anniversary edition of the device tipped to be the iPhone 8. The special edition of the phone is tipped to come with an OLED display that covers the entire front of the phone. However, reports suggest that Apple may be facing supply issues with the new phone, and the iPhone 8 numbers could fall short of demand.
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