Google to pay some $15 bn to stay as default search engine on Apple Safari for iPhones, Macs
Google and Microsoft have both been racing to place their search engines as default on both iOS and macOS and the competition is heating up. According to reports, Google has drastically increased its payments to Apple to place Chrome as the default search engine on Safari in iOS and macOS. This information comes via a note from Bernstein analyst Toni Sacconaghi which was first published by Philip Elmer-DeWitt at Apple 3.0. Not only is Chrome the default search engine on the Safari browser on iPhones and Macs, but it is also the default option on Spotlight searches on Mac and Siri search results.
According to Sacconaghi, Google could be paying nearly $15 billion in 2021 for this default placement. This is an increase over the $10 billion the company paid last year for this same exclusivity. This is also a massive increase from the $3 billion Google paid in 2017. The analyst is of the opinion that Google is likely paying larger sums to Apple to ensure that Microsoft does not outbid it. And this $15 billion sum is significant enough to amount for almost 9% of Apple's gross profits.
Google used to be the default search engine on the iPhone when the device first launched in 2007. In 2012 Bing became the default search engine on iOS and macOS only to be replaced by Google in 2017. And that's how things have remained since.
This investment is important for Google and parent company Alphabet and profitable too. Other ventures like Waymo and Google Cloud are yet to generate any profit for Alphabet, but the ad business is running strong. In July this year, Google reported record-high quarterly revenues and profit powered by the rise in advertising spending.
As long as Google manages to remain the default search engine on Apple's platforms, it benefits from placing mobile ads on searches and websites visited. However, Google faces a tough fight from Microsoft's Bing for being the default search engine, and that's not all. The fight runs into the courtroom as well. Also, the regulatory risks involved might force Apple to remove Google as a default search engine and might also apply to Microsoft as well.