Do You Know How Much Google Pays Apple To Be The Default Search Engine In Safari?
According to a report by Business Insider, Apple earned well over $1 billion from Google in 2011 just by having it as the default search engine in Safari on OS X and iOS. Macquarie analyst Ben Schachter notes that Apple’s decision to shift from Google Maps could eventually lead to moving away from Google as a search engine as well. However, this won’t hurt Google initially, says the analyst, since Google searches on Apple devices resulted in $1.3 billion in gross revenue last year, out of which $1 billion was paid back to Apple.
Detailing Schachter’s statistics from the source:
Deeper look at the financial impact – We know that Apple TAC is accounted for in the Google.com TAC line item reported each quarter by Google. For 2011, Google reported ~$1.5bn in total Google.com TAC. For modelling purposes, we assume that Apple represented ~66% of this TAC (though we acknowledge that this could be high), or $1bn. At a 75% TAC rate, this means that Google generated ~$1.3bn in gross search revenue through default search placement on Apple devices. In other words, this $1.3bn of search revenue ($335m net search revenue) in 2011 is at risk if Apple moves away from Google. $335m represented ~1% of net Google.com search revenue. Notably, mobile/Apple revenue is among its fastest growing revenue drivers.
The analyst does however say that the rate at which iPad appears to be taking over the world, it may overtake PCs in the next 5 years to become the number one way people are searching, which will definitely put Google in trouble.