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A.M. Sacconaghi Jr. Estimates That Google Is Paying Apple $3 Billion to Remain the Default Safari Search Engine

Todd Haselton, writing for CNBC:

“Court documents indicate that Google paid Apple $1B in 2014, and we estimate that total Google payments to Apple in FY 17 may approach $3B,” Bernstein analyst A.M. Sacconaghi Jr. said. “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.”

I would love to be a fly on the wall for those negotiations.

Sacconaghi said that Google might decide to back away from paying Apple any licensing fees if it feels confident enough that its search engine is so popular Apple won’t include any other option by default.

On the other hand, Sacconaghi said that Apple’s iOS devices contribute about 50 percent to Google’s mobile search revenue, which means Google might be too afraid to walk away from its licensing deal with Apple. In this case, it’s a win-win for Apple and Google.

If Apple was willing to dump Google Maps, they’d be willing to dump Google Search too. The differences between results from Google versus Bing or DuckDuckGo are way smaller than the differences between Google Maps and Apple Maps back in 2012. Apple is in a strong position in this relationship.

Thursday, 17 August 2017