Google spending $15B to remain default iOS search engine to block Microsoft

Posted:
in iOS edited August 2021
Google is seemingly adamant in its decision to maintain the coveted role of default search engine on iOS, a strategy that could generate nearly $15 billion for Apple in 2021, according to one industry analyst.

Google


The internet search giant is forecast to spend nearly $15 billion over fiscal 2021 for the opportunity, according to a note from Bernstein analyst Toni Sacconaghi, as reported by Philip Elmer-DeWitt's Apple 3.0 this week. That figure is up from as much as $11 billion in 2020 and up to $9.5 billion in 2018.

Neither Apple nor Google have disclosed details of the deal, but the contribution reportedly accounted for between 15% to 20% of Apple's annual profits in 2020. Sacconaghi arrived at the $15 billion figure by parsing through Apple's recent earnings reports and analyzing Google's traffic acquisition costs.

The large sum is in part thought to keep competitors at bay.

"We have noted in prior research that [Google] is likely paying to ensure Microsoft doesn't outbid it," Sacconaghi writes. "That said, with payments likely to approach $18 - $20B in FY 22, it [is] not implausible that Google could revisit its strategy."

While Google is currently expected to keep pressure on competitors in 2022, the company could attempt to renegotiate terms or drop the initiative altogether. Other risks include regulatory scrutiny that could result in a 4-5% impact to Apple's gross profits.

Google's arrangement with Apple was reportedly the focus of a Department of Justice antitrust lawsuit that accused the search giant of abusing its market power.

With a well-heeled user base, many of whom rely on Safari and system search tools, Apple's iOS is a valuable gateway to profits as search companies look to convert on ad sales. Sacconaghi previously argued that Apple could benefit further from its arrangement with Google by buying a search engine like DuckDuckGo and use the asset as leverage in negotiations. A first-party search engine would also serve as a backup should Google decide to terminate the deal.

Read on AppleInsider

Comments

  • Reply 1 of 12
    mobirdmobird Posts: 749member
    Why doesn't Apple help a privacy advocate such as the duckduckgo organization and let them supply the search engine? Apple doesn't need the revenue stream at this point. Wouldn't that partner be more in line with Apple's current privacy stance? Or maybe you have to be in the "Big Tech" fraternity to be considered, or maybe duckduckgo is unable to scale to accommodate such volume for what ever reason...
    rcfa
  • Reply 2 of 12
    lkrupplkrupp Posts: 10,557member
    mobird said:
    Why doesn't Apple help a privacy advocate such as the duckduckgo organization and let them supply the search engine? Apple doesn't need the revenue stream at this point. Wouldn't that partner be more in line with Apple's current privacy stance? Or maybe you have to be in the "Big Tech" fraternity to be considered, or maybe duckduckgo is unable to scale to accommodate such volume for what ever reason...
    Except for the FACT that duckduckgo is a useless piece of crap that can’t find anything. I know, I’ve tried using it several times and always had to return to Google to get what I was looking for. Google Search may have privacy problems but it is the best algorithm out there, period.
    edited August 2021 applguy
  • Reply 3 of 12
    crowleycrowley Posts: 10,453member
    mobird said:
    Why doesn't Apple help a privacy advocate such as the duckduckgo organization and let them supply the search engine? Apple doesn't need the revenue stream at this point. Wouldn't that partner be more in line with Apple's current privacy stance? Or maybe you have to be in the "Big Tech" fraternity to be considered, or maybe duckduckgo is unable to scale to accommodate such volume for what ever reason...
    Apple make a lot of money but not so much that $15bn/year is an easy write-off.
    CloudTalkinmwhiterinosaurseanj
  • Reply 4 of 12
    cjcoopscjcoops Posts: 108member
    mobird said:
    Why doesn't Apple help a privacy advocate such as the duckduckgo organization and let them supply the search engine? Apple doesn't need the revenue stream at this point. Wouldn't that partner be more in line with Apple's current privacy stance? Or maybe you have to be in the "Big Tech" fraternity to be considered, or maybe duckduckgo is unable to scale to accommodate such volume for what ever reason...
    All you have to do is go to the  Safari settings on your iPhone and choose DuckDuckGo (or Bing for that matter). It's that easy.
    baconstangdavwatto_cobra
  • Reply 5 of 12
    MplsPMplsP Posts: 3,904member
    lkrupp said:
    mobird said:
    Why doesn't Apple help a privacy advocate such as the duckduckgo organization and let them supply the search engine? Apple doesn't need the revenue stream at this point. Wouldn't that partner be more in line with Apple's current privacy stance? Or maybe you have to be in the "Big Tech" fraternity to be considered, or maybe duckduckgo is unable to scale to accommodate such volume for what ever reason...
    Except for the FACT that duckduckgo is a useless piece of crap that can’t find anything. I know, I’ve tried using it several times and always had to return to Google to get what I was looking for. Google Search may have privacy problems but it is the best algorithm out there, period.
    Must be user error - I’ve been using DDG almost exclusively for 2 years. Really don’t miss google
    baconstangrcfadavwatto_cobrajony0
  • Reply 6 of 12
    I use DDG on the phone. Is mainly us. Google is faaar better.
  • Reply 7 of 12
    MplsP said:
    lkrupp said:
    mobird said:
    Why doesn't Apple help a privacy advocate such as the duckduckgo organization and let them supply the search engine? Apple doesn't need the revenue stream at this point. Wouldn't that partner be more in line with Apple's current privacy stance? Or maybe you have to be in the "Big Tech" fraternity to be considered, or maybe duckduckgo is unable to scale to accommodate such volume for what ever reason...
    Except for the FACT that duckduckgo is a useless piece of crap that can’t find anything. I know, I’ve tried using it several times and always had to return to Google to get what I was looking for. Google Search may have privacy problems but it is the best algorithm out there, period.
    Must be user error - I’ve been using DDG almost exclusively for 2 years. Really don’t miss google
    I also find DuckDuckGo meets my needs for search. Maybe others do not find it satisfactory because it's not as effective at converting vaguely worded queries into what the user wants. But that's just speculation; since I don't use Google I can't comment on whether it might be a "better" search engine.
    baconstangwatto_cobrajony0
  • Reply 8 of 12
    XedXed Posts: 2,483member
    MplsP said:
    lkrupp said:
    mobird said:
    Why doesn't Apple help a privacy advocate such as the duckduckgo organization and let them supply the search engine? Apple doesn't need the revenue stream at this point. Wouldn't that partner be more in line with Apple's current privacy stance? Or maybe you have to be in the "Big Tech" fraternity to be considered, or maybe duckduckgo is unable to scale to accommodate such volume for what ever reason...
    Except for the FACT that duckduckgo is a useless piece of crap that can’t find anything. I know, I’ve tried using it several times and always had to return to Google to get what I was looking for. Google Search may have privacy problems but it is the best algorithm out there, period.
    Must be user error - I’ve been using DDG almost exclusively for 2 years. Really don’t miss google
    I must be institutionalized because I give DDG my all for several weeks every year and it just doesn't stick because it's not good enough. I really don't want to use Google (or Amazon) but I just can't quit them.
    applguy
  • Reply 9 of 12
    DDG serves my needs. Glad to go with the underdog.
    davwatto_cobrajony0
  • Reply 10 of 12
    $15bn/year would easily make DDG better 
    jony0
  • Reply 11 of 12
    croprcropr Posts: 1,117member
    mobird said:
    Why doesn't Apple help a privacy advocate such as the duckduckgo organization and let them supply the search engine? Apple doesn't need the revenue stream at this point. Wouldn't that partner be more in line with Apple's current privacy stance? Or maybe you have to be in the "Big Tech" fraternity to be considered, or maybe duckduckgo is unable to scale to accommodate such volume for what ever reason...

    Ever tried DDG in a non US, non English context?  Apple wants a single global player for its search engine, not a local player
    muthuk_vanalingamjony0
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