Why Google Pays Apple $1 Billion a Year


Source: Atlantic, The
Coverage Type: reporting
Location:
Google, 1600 Amphitheatre Parkway, Mountain View, CA, 94043, United States

Google is expected to pay an estimated $1 billion to Apple in 2014 to keep its search engine as the default on iOS devices because, well, Google makes a huge portion of its mobile revenue from iPhones and iPads — enough to make rivalries disappear.

Last year, Google paid $417 million for the exclusive search rights, up from just $82 million in 2009. Given the monster growth track of Apple devices, as well as the per-device rate Apple charges Google for prime search real estate, the exclusivity cost is expected to double over the next two years. And even though it seems a strange partnership for the sometimes rivals — they're competing over phone software, and Google's results show up in Apple's competing browser — the iPhone and iPad business is lucrative enough for Google's search advertising business that it might even be considered a steal.

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