Google could pay as much as $15 billion USD (about $18.9 billion CAD) to remain the default search engine on Apple devices this year.
It’s no secret that Google pays Apple handsomely to remain the default search engine on Apple’s phones and tablets. Last year, Google reportedly forked out $10 billion USD (roughly $12.6 billion CAD) for the default position.
This year’s higher fee was detailed in an investor note published by Toni Sacconaghi, a financial advisor at Bernstein (via Philip Elmer-DeWitt’s Apple 3.0, a.k.a. ‘Ped30’). However, Google isn’t just paying more in 2021 — Sacconaghi estimates Google’s payments will increase each year and will approach $18 to $20 billion USD next year ($22.7 to $25.2 billion CAD). These estimates are based on Apple’s public filings and bottom-up analysis of Google’s traffic acquisition costs.
Sacconaghi’s note goes on to detail potential risk factors for Apple and Google. For one, Google’s search dominance has come under increased regulatory scrutiny. With both Apple and Google already under the legal microscope for app store practices, it wouldn’t take much for regulatory bodies to expand investigations into the companies’ search relationship.
Another risk is competitors — both Microsoft and Yahoo are reportedly interested in becoming the default search on iOS, and it’s likely Google is paying as much as it is to prevent them from gaining a foothold on iOS.
Of course, with prices increasing, there’s also the risk that Google will decide it’s not worth the cost and seek to renegotiate with Apple.
Finally, there’s the ongoing rumour that Apple plans to launch its own search engine to replace Google and other third-party options. The rumour came from increased activity from Apple’s web crawler, but it was later assumed to be from its efforts to improve Siri, not from building a new search engine.
Moreover, there’s a possible privacy problem here for Apple. Although the company champions itself as an advocate of user privacy, several people have reacted negatively to the Google search default news. The general sentiment seems to be that Apple cares about privacy only when it makes financial sense for the company.