Google will be paying Apple $15 billion (roughly Rs. 1,10,718 crores) to remain the default search engine on iPhone, iPad, and Mac in 2021, according to analysts. The price to keep Google as the default search engine on the Safari browser is said to have gone up once again, which could increase even more in 2022. It is widely understood that Google pays Apple a lot of money every year to retain the dominance of its search engine, and that involves outbidding Microsoft.
Google pays Apple to remain default search engine
The reason Google pays Apple is to ensure that Safari is the default search engine and to keep Safari as a standard web browser for the iOS devices, Mac, and Apple TV. Safari, which used to be called WebKit, was co-developed with Google, and is largely responsible for keeping Google at the top of the search engine rankings, and also the result lists on every search engine site. Now that iOS 7 has made Google the default search engine on iOS, and Safari as a standard web browser, the two companies are negotiating the same terms for Mac and the iPad and also will make the same terms for the Apple TV and Mac computers in 2021. That means, Google is planning to pay Apple $6-7 billion per year from 2021, and an extra $3-4 billion per year from 2022.
How much does Google pay Apple?
Advertisement According to a report from CNBC, Google will be paying Apple $15 billion (roughly Rs. 1,10,718 crores) to remain the default search engine on the Safari browser. The deal was set in 2014, when Apple introduced the Apple Maps app. Microsoft, on the other hand, pays Apple $6 billion (roughly Rs. 39,747 crores) every year to remain the default search engine on the Mac. This deal expires next year, in March 2019, according to AppleInsider. According to analysts, Google will only be getting a one-year extension of this deal this year, in February 2019, and will be back with a bigger offer next year.
Why does Google do this?
Since Google started tracking user's browsing history on the Safari browser in 2010, Apple has been paying for the search engine to be included in the address bar. Since the iPhone 4S in 2011, Google has been paying Apple between $1 and $2 per search conducted. However, if you recall, Google gave Apple an ultimatum, and that was to either pay up $3 billion (roughly Rs. 19,640 crores) to continue search engine inclusion or lose iPhone/iPad search ads. It's hard to say whether the terms were too high for Apple to bear, but as the Wall Street Journal notes, "their negotiations with Google have the potential to resolve a key competitive threat to Apple and some of its biggest customers.
What will happen in 2022?
This is the period in time when the 10-year search engine agreement is set to expire. However, according to a report by Recode, which has been independently confirmed by Bloomberg, Google's profit margin would be so large that it would account for almost a quarter of Apple's total profit in 2022. However, the deal would remain in place until the Safari default expires. The arrangement would work out to Apple being paid around $9 billion (roughly Rs. 5,000 crores) annually, which sounds like a nice sum for a company like Apple that is said to have grossed about $215 billion (roughly Rs. 12 lakh crores) in 2017. Both Bloomberg and Recode are citing people familiar with the matter. Apple's deal with Google would also include iMessage integration.
Will the deal change or end this year?
According to Morgan Stanley analysts, the deal should go through this year. A Bloomberg report adds that according to the terms, Apple will continue to pay Google the $3 billion (roughly Rs. 18,700 crores) per year until 2020, when the amount will increase to $4.5 billion (roughly Rs. 27,800 crores) per year. This is expected to be the end of the deal when Apple ends support for Safari on iOS 11. It is widely believed that Apple does this to thwart Microsoft's efforts to create a search engine, Bing, in the iPhone as that would take traffic away from Google. Microsoft hasn't commented on this matter so far. Last year, Microsoft had lost the chance of getting Bing for the iPhone due to a lawsuit in 2017.
These deals don't look like they'll come to an end anytime soon. In fact, they seem set to ramp up, with Google planning to pay Apple $3 billion annually in 2019, a new report states. The report adds that, in 2021, the Google-Apple deal is set to be $6 billion a year. Apple users will see the regular search results whenever they use Google-powered Safari to search on the browser, but they'll also see Google-powered results when they navigate to Google.com. The Information says this is Google's push to be first on all platforms and Apple's push to make more money and be the default search engine on Safari. It adds that even though Apple offers Bing as the default search engine in iOS Search, Google leads in mobile searches.