Google paid Apple $20 Billion to be default search engine in 2022
The ongoing antitrust lawsuit against Alphabet by the Justice Department has revealed that Google paid Apple a staggering $20 billion in 2022 for default search engine status.
In 2022, Alphabet paid Apple $20 billion
Google's relationship has been under heavy scrutiny during an antitrust lawsuit accusing the company of using its size as an advantage to prevent competitors from entering the search market. One of the biggest issues in question is how much it pays Apple, which was previously estimated to be nearly $20 billion -- a figure proven true by a new court filing.
Despite attempts by Google and Apple to keep the payment confidential, details emerged during the trial through testimony and accidental disclosures. According to a report from Bloomberg, court documents revealed that Google paid Apple $20 billion in 2022 to be the default search engine on Apple platforms.
The $20 billion figure wasn't in Apple or Google's security filings, but it was confirmed by unsealed testimonies. The figure was shared by Eddy Cue, Apple Senior Vice President of Services, during the trial.
Initially a free arrangement, it evolved into a lucrative deal where, by May 2021, Google was paying Apple over $1 billion monthly. In 2020, the figure was 17.5% of Apple's total operating income.
Google pay Apple $20 billion for default search engine status on iPhone
Other figures were also disclosed by the filing. Microsoft tried to take over as the default search engine with Bing by offering 90% of its advertising revenue. Bing was even offered up for sale to Apple in 2020.
These factors are likely damning for Google's case. Google and the DOJ will offer closing arguments on Thursday and Friday, but a decision won't be made until later in the year.
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Comments
Google, has and always will be a one-trick pony. A very wealthy pony but that's it. If this whole AI thing comes of age someone else - not the makers of MS-DOS - will usurp Google in search and that will be it.
Without Search there is nothing else that they offer. Look at their website, every project they have ever attempted has gone to the elephant graveyard. I kid you not there's a website that lists some twenty products that they have RIP'ed.
Yes, they have Google Maps - which I use all the time, I don't trust Apple Maps - but that's not a money maker. They also have Google Docs - a mere blimp on their financial statement. And oh yes, YouTube. Does that make money?
Apple needs to absorb Google Search; Netflix and Spotify and it will become a 5 trillion company. Forget the Apple Jalopy and this Vision Pro madness. Google Search, Netflix and Spotify make money and they will make heaps more if Tim & Team manages them.
YouTube reported over $30B in revenue in 2023 (through a combination of advertising and the YouTube Premium subscription program) and is generally considered to be second only to Google's search advertising business in terms of profitability.
Like all other cloud compute providers (Microsoft Azure, Amazon AWS), GoogleCloud has seen an immense surge in business as a result of companies spinning up cloud-based AI compute. While this may (or may not) be sustainable in the long-term, the immediate gains in terms of revenue and profit for all three companies are real.
Yes, Google is over-reliant on its search-based advertising business, much in the same way that Apple is over-reliant on the iPhone. Either company could face an existential threat if development of new technologies, or changes in consumer preference, cause irreversible swings away from these products. The chance of that happening in either case is slim, however, due largely to inertia and because both companies continue to build moats. Paying Apple to keep Google Search front-and-center is a form of moat. Apple fighting tooth and nail to avoid the opening of their App Store ecosystem is a form of moat. Neither company is going to go quietly as challengers to their cash cows gather in the distance.
That 20 billion dollar bribe keeps Apple from developing a YouTube clone or getting into cloud services or servers and has been money well spent if you are Google, the ability of smarter search for everyone thru AI will disrupt Google in a big way. Getting rid of the bribe will be the only good thing the DOJ will do.
Is Google paying to be the default or for Apple to stay off its turf?
I will admit to being surprised by the amount mentioned here.