Google Reportedly Pays Apple $8-12 Billion Per Year to be Default iOS Search Engine

The United States Justice Department is targeting a lucrative deal between Apple and Google as part of one of the U.S. government's largest antitrust cases, reports The New York Times.

iu

On Tuesday, the Justice Department filed an antitrust lawsuit against Google, claiming the Mountain View-based company used anticompetitive and exclusionary practices in the search and advertising markets to maintain an unlawful monopoly.

In 2017, Apple updated an agreement to keep Google's search engine as the preselected option on Apple devices. The New York Times reports that Apple receives an estimated eight to 12 billion dollars per year in exchange for making Google the default search engine on its devices and services, including the iPhone and Siri. This is believed to be the single biggest payment Google makes to anyone, and it accounts for 14 to 21 percent of Apple's annual profits.

Prosecutors claim that the deal is representative of illegal tactics used to protect Google's monopoly and stifle competition. According to the Justice Department, almost one half of Google's search traffic now comes from Apple devices, and the prospect of losing the agreement has been described as "terrifying" and a "code red" scenario within the company. Google's search traffic is integral to its business model due to its system of ads.

Apple is likewise coming under fire for facilitating anticompetitive behavior by acquiescing to the deal and extracting more money with regular renegotiations. Although the two companies are competitors in Silicon Valley, the agreement is said to be part of "an unlikely union of rivals."

The Justice Department's complaint cites a senior Apple employee's remark from 2018 which said that "our vision is that we work as if we are one company."

The legal intervention poses a threat to a significant chunk of Apple's revenue, but it is a bigger danger for Google, which would seemingly have no way to replace the traffic it would lose. The New York Times speculates that such a breakup could push Apple to acquire or build its own search engine, which could in turn pose an even greater threat to Google.

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Top Rated Comments

WannaGoMac Avatar
17 weeks ago
That's a lot of iphone chargers
Score: 52 Votes (Like | Disagree)
Apple_Robert Avatar
17 weeks ago
I knew it was a lot of money but, I would have never guessed it was that much.

A privacy centered company using a company that exploits people’s privacy as the default search engine is crazy stuff.
Score: 46 Votes (Like | Disagree)
MacBH928 Avatar
17 weeks ago
sheesh...$8B just to be the default , not the exclusive search engine!
How much data are they harvesting and selling from just plain searches?!
Score: 45 Votes (Like | Disagree)
Seoras Avatar
17 weeks ago
Which is why Google created Android. Why pay someone else when you can give a phone OS away for free for less.
They don't care about Android, it isn't their business. They care only about search.
Score: 33 Votes (Like | Disagree)
X--X Avatar
17 weeks ago

....and folks say Apple is all about privacy
The only thing Apple is all about... is money.
Score: 31 Votes (Like | Disagree)
arn Avatar
17 weeks ago

Seems like google would lose little traffic but apple would lose a lot of money. (Most people would choose google as their default)
Maybe. But the crazy stat is 50% of google search traffic comes from Apple. Not sure google wants to gamble with that. Most people don’t change defaults.

According to the Justice Department, almost one half of Google's search traffic now comes from Apple devices, and the prospect of losing the agreement has been described as "terrifying" and a "code red" scenario within the company.
Score: 28 Votes (Like | Disagree)

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