Google has announced that it would pay Apple an enormous sum of $15 billion.
To remain because of the default program on all Apple devices, including iPads, Macs, and, most notably, iPhones.
Google, as we all know, pays Apple a large sum of money each year to be the default search engine on the iPhone, iPad, and Mac.
The cost of retaining Google as Safari’s default search engine has soared.
Google will pay Apple $10 billion in 2020 in exchange for remaining the default search engine. However, according to the investor letter got by Ped30, Bernstein analysts estimate that by 2021, the amount will have climbed by 50%.
And this time, Google is paying Apple $15 billion (in Indian rupees, 1,10,178 crores) to maintain it as the default search engine on Safari.
This sum might account for 9% of Apple’s sales in terms of gross profit. Analysts predict that in 2022, this sum will rise by $18 billion to $20 billion. People believe that Google’s investment will cause a good deal for it and its parent firm, Alphabet.
Google generates a lot of money from its massive advertising. Google recorded high record revenue in July 2021 by solely spending on advertising.
As a result, by being the default search engine. Google will profit from placing phone adverts on searches and website visits. However, Microsoft’s Bing is a fierce competitor of Google, and the two companies are battling it out in court.
Apple’s first gadget was released in the year 2007. The iPhones default search engine was Google at first. However, Bing entered the battle later, and Apple switched to Bing in 2012. Bing has replaced Spotlight as the default search engine for iOS (previously known as macOS).
Then, in 2017, Apple moved back to Google as the default search engine in iOS for Siri and Spotlight on the Mac.
Google and Microsoft’s Bing have both paid Apple billions over the last decade. Which is how Apple makes such a lot of money and keeps changing its search engine.
Later, Toni Sacconaghi, a Bernstein analyst, claims that Google is “paying to guarantee Microsoft does not outbid it.”
The paper also addresses two dangers associated with Google’s payment to Apple. The first is that it is a regulatory risk, which might have a long-term impact on Apple’s earnings.
The second is that Google may rethink their transaction and decide that such a sum is simply not worth it.
The following is a list of what is discussed in the report.
We perceive two risks associated with GOOG’s payments to AAPL.
Regulatory risk, which we believe is genuine but years away; an unfavorable verdict might have a 4 to 5 percent impact on Apple’s gross revenues.
That Google is preventing Apple from being the default software. Alternatively, you might try to renegotiate the
conditions and pay less. GOOG is likely to pay to ensure Microsoft does not outbid it, as we predicted in a previous study.
With payments expected to reach $18 to $20 billion in FY 22, it’s not out of the question that Google reconsiders its policy.”
