Google ‘pays Apple $1bn to be default search’

13/02/2013

Google will start paying Apple up to $1 billion a year for the right to the be default search engine on iPhones, iPads and the iPod touch, according to a news report.

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Business Insider quotes Scott Devitt of Morgan estimating that Google could be paying Apple up to $1 billion just to be the default search engine in iOS, and that figure is expected to increase over the next few years.

Previously, Google struck a similar agreement with Mozilla and its web browser Firefox for $400m a year.

Earlier reports claimed theat Apple and Google were involved in a revenue sharing deal, however the analyst doesn’t think this is the case because it would be too messy.

He thinks Apple would instead be far more likely to do a fee per device agreement for the benefits of upfront payments and easier accounting.

Within the report, Devitt calculates that Apple will receive 31 per cent of Google's traffic acquisition costs in 2014, as the firm spends a total of $3.5bn to make its search engine the default in third party software.

The analyst believes this unlikely partnership has helped Google control an estimated 95% of the mobile search market.

With the payment, Google not only limits the opportunities for rival firms within the default search provider race, but is also able to obtain valuable data from users when they access Google's search engine.

As Jay Yarow of Business Insider wrote, “when you consider that Apple and Android are swallowing the mobile market, paying ~$1 billion a year for a monopoly on the most lucrative online business in the world is a no-brainer.”

Read the full report here

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