Apple Has Been Earning Billions Off Of Google

Why does the iPhone use Google Search? Money. And lots of it.

In terms of marketshare, Google’s Android is the number one mobile operating system globally. Apple’s iOS doesn’t even come close. Apple would of course love to change that, so why are they using Google’s search engine as the default search on the iPhone. The answer won’t surprise anyone, however the details just might.

Why is Apple utilizing Google’s search? Well, it’s not because of the quality of the search engine, it’s because of money. And lots of it. Bernstein analyst A.M. Sacconaghi Jr. estimates that Google’s payments to Apple in FY17 may be approaching $3 billion dollars. Not only that, “Given that Google payments are nearly all profit for Apple, Google alone may account for 5% of Apple’s total operating profits this year, and may account for 25% of total company OP growth over the last two years.”

While it’s quite obvious what Apple is getting out of this deal, what is Google getting? Why, they’re getting money as well. Sacconaghi states that about 50% of Google’s mobile search revenue comes from iOS devices. Let’s not forget that with iOS and Android both defaulting to Google search, it’s pretty obvious that this keeps Google as the top search engine.

The question is, what happens when these two tech giants decide to stop playing nice? Who would be the first to walk away from this deal? Apple who would be walking away from a large amount of pure profit dollars? Or Google, who could do quite a bit of damage to Apple’s bottom line at a risk to their search engine domination? I have to admit this would be interesting to see.

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Founder & Owner of UTB Blogs. Former BlackBerry Elite. When I'm not talking or writing about BlackBerry, you'll find me using my BlackBerry.