Google pays Apple billions of dollars to remain default Safari search engine
It might come as a surprise but Google pays Apple billions of dollars to remain default Safari search engine on iPhone, iPad, and Mac. According to Bernstein analysts, the payment from Google to Apple may rise to $15 billion in 2021, up from $10 billion in 2020 as the race between Google and Microsoft for placement of their search engines as defaults within Apple’s products heat up.
Google has been steadily increasing its payment to Apple, according to a note from Bernstein analyst Toni Sacconaghi.
Google is the default search engine for the Safari browser on both platforms and also on Spotlight searches on Mac and Siri search results.
Analyst Sacconaghi estimates that Google could be paying $15 billion in 2021, an increase over the $10 billion Google paid last year. This is an astronomical increase from the $3 billion Google paid Apple in 2017 to be the default search engine on Safari.
Sacconaghi says that Google is likely trying to prevent Microsoft from outbidding it as the default search engine. When iPhone was first released in 2007 Google was the original default search engine on the device. That changed in 2012, with Miscrosoft’s product Bing becoming the default search engine of iOS and macOS before it switched back to Google in 2017.
"We see two potential risks to GOOG’s payments to AAPL: (1) regulatory risk, which we believe is real, but likely years away; we see a potential 4-5% impact to Apple’s gross profits from an adverse ruling; & (2) that Google chooses to stop paying Apple to be the default search engine altogether, or looks to renegotiate terms and pay less. We have noted in prior research that GOOG is likely paying to ensure Microsoft doesn’t outbid it. That said, with payments likely to approach $18 – $20B in FY 22, it not implausible that Google could revisit its strategy."
What does Google benefit from being the default search engine
You might be wondering what Google benefits from becoming the default search engine at such a cost. This placement is a worthy investment for Google due to the company’s ad business. Google benefits from placing ads on searches and websites visited.