Google will pay Apple nearly $3 billion (roughly Rs. 19,276 crores) this year to remain as the default search engine on iOS devices. A US-based research and brokerage firm, Bernstein revealed this in a note to investors on Monday.
The report further suggests that Google has increased the amount from $1 billion in 2014 to $3 billion this year. The firm sees both pros and cons in the payments, but both the Giants will be in a win-win situation with the agreement.
Bernstein analyst A.M. Sacconaghi Jr. said,
“Court documents indicate that Google paid Apple $1B in 2014, and we estimate that total Google payments to Apple in FY 17 may approach $3B.”
According to the report, Google’s licensing fees will make up a large of Apple’s services business. It is to be noted that Apple has been considering its services business as a quickly growing segment of the company. So, this payment from Google will boost the growth for Apple.
“Given that Google payments are nearly all profit for Apple, Google alone may account for 5% of Apple’s total operating profits this year, and may account for 25% of total company OP growth over the last two years,” Sacconaghi adds further.
Sacconaghi also said that Google might back away from paying any licensing fees to Apple. If the search giant feels that Google is so popular that Apple will not include any other search engine option by default.
But, he also noted that Apple’s iOS devices contribute nearly 50 percent to Google’s mobile search revenue. So, Google might never want to call off its licensing deal with Apple despite the massive payment.
So, overall it seems beneficial situation for both Apple and Google.