Google will pay Apple nearly $3 billion (roughly Rs. 19,276 crores) this year to remain as the default search engine on iOS devices, US-based research and brokerage firm Bernstein has said.
According to a note to investors on Monday, Google has increased the amount – from $1 billion three years ago to $3 billion this year – and Google’s licensing fees make up a large bulk of Apple’s services business.
“Court documents indicate that Google paid Apple $1B in 2014, and we estimate that total Google payments to Apple in FY 17 may approach $3 billion,” CNBC quoted analyst A.M. Sacconaghi Jr. as saying.
“Given that Google payments are nearly all profit for Apple, Google alone may account for five percent of Apple’s total operating profits this year, and may account for 25 percent of total company OP growth over the last two years,” he added.
Sacconaghi added that Google may be able to back away from these massive payments if it feels ‘confident enough’ about its search engine that Apple would make it be the default option it provides in any case.
Apple’s iOS devices contribute about 50 percent to Google’s mobile search revenue, Sacconaghi noted, which would mean the company may just be ‘too scared’ to step away from the deal despite the payment.