Google is paying Apple an estimated $3 billion per annum, or more, in order to remain the default search engine on iPhone, iPad and iPod touch devices, according to a new analysis from Bernstein analyst Toni Sacconaghi cited by Business Insider.
In fact, Google may account for as much as five percent of Apple’s total operating profits this year and up to one-quarter of total operating profit growth recently. Google is entitled to a percentage of ad revenue generated through searches users conduct on their iOS devices.
The $3 billion figure is a significant increase from the $1 billion that Apple received from Google in 2014 in order to keep its search engine as the default option on iPhone and iPad.
We know about that number because it leaked out from a transcript of court proceedings in Oracle’s copyright lawsuit against Google.
Digging through Apple’s quarterly filings and focusing on the company’s booming Services business, which includes licensing revenues like those Google pays Apple, Bernstein has determined that Google could be the biggest or second-biggest contributor to services growth.
Sacconaghi and his team came to the number by extrapolating the $1 billion payment in 2014 for Google and Apple’s growth in the relevant line items in the three years since then.
If the Apple-Google revenue share really was at one point 34 percent—as prior reports suggested—and assuming that’s still the case today, Apple is poised to receive “a much higher” sum from Google in the future than the $3 billion today, the analyst said.
Whatever money Google pays Apple is likely all profit, Bernstein points out.
It should be noted that Apple is using Bing for some web-related queries conducted through Siri. That said, anything searched for by typing a query into Safari’s URL field defaults to Google unless you change your provider in Settings → Safari → Search Engine.