The Apple Fee: Google Has Paid $9 Billion To iPhone Maker In 2018

Must Read

Free Netflix in India: A Result of Slow Growth In Q3 2020?

Netflix is testing a new strategy that could lead to free Netflix in India. The online streaming...

Jio Pages: The Indian Browser Reliance Is Betting On Now!

Looks like Reliance wants to establish Jio as a synonym of technology. After launching a fleet of...

Flipkart, Amazon Hurtle To Secure Their Slice in Aditya Birla Fashion

The battle conch for the festive season has already been blown. Now in a bid to take...

Apple Inc. (NASDAQ:AAPL) usually demands a lot of investment from its millions of ultra-loyal users across the globe. This has attracted the eyeballs of many other companies who have set their eyes on the captive user base of the world’s most valuable company. This statement was again reinforced when it was recently reported by Research firm Goldman Sachs that Google (Alphabet Inc. (NASDAQ: GOOGL)) paid Apple a reported $9 billion in 2018 to secure its position as Apple’s default search engine.

For people who have heard about this for the first time, this isn’t the only instance of the reporting of this deal. Details of this deal have been known for some time now. However, no particular proof of the full transaction is available as of now. The only reported deal of which evidence is available is one from four years ago. Back in 2014, Google paid Apple a total sum of $1 billion to remain as their default search engine on their devices, especially iPhone. But how exactly did the fee, which was whopping $1 billion back in 2014, turn into an even more humongous $9 billion in the span of 4 years?

The answer lies in Google’s financial growth. In 2017, Bernstein’s analysts reported that Google’s mobile revenues more than tripled in between 2014 and 2017. The figures indicate that the increase is from $16 billion in CY’14 to $50 billion in CY’17. Since the revenues increased, so will the fee commanded by Apple, who accounts for a sizable share of worldwide smartphone userbase. Thus, as Google’s fee to Apple is directly linked to Google’s mobile revenue earnings, the fees also seem to be increasing along with the revenues. This explains the steady increase in payment over such a presumably short amount of time.

Advertisements

Apple’s Fee To Increase In 2019

As mentioned above, the payment of money involved in the deal is directly proportional to the amount of money Google earns through its mobile revenue. As such, the ‘fee’ is reported to be $9 billion this year. Analysts expect the ‘fee’ to go up to $12 billion next year. 

As such, Google accounts for a quite a large contribution in Apple’s total revenue. Apple has been giving hints as to the fact that a large portion of its revenue is going to come from its services. Now, Apple’s services range from a lot of things, with the App Store being the most prominent among them. However, this ‘fee’ payment by Google also comes under this umbrella of service revenue.

However, the same can also be said about Apple’s contribution to Google’s revenue. Back in 2017, Bernstein’s analysts claimed that Apple’s iOS devices account for a whopping 50% of Google’s mobile revenues.

Apple and Google – A Deal to Last?

With the ever-changing scenario of the tech industry these days, it is hard to predict the longevity of anything at all. This deal is lucrative for both parties, at the moment. It could also happen that Google might decide to stop paying Apple the much talked about ‘fee’, should they be confident of their popularity such that Apple would have no other option to replace them with. As it stands, Apple does use other search engines in its smartphones as well. For example, it uses Bing while searching the web through Siri. So, it is really hard to predict how long it will last. But as long as it does, no party is particularly complaining!

LEAVE A REPLY

Please enter your comment!
Please enter your name here
Advertisements

Latest News

Huawei All Set To Bid Adieu To Smartphone Market?

The effects of the US ban on Huawei, along with a few other Chinese companies, have started...

Tata Group To Acquire 50% Stake In BigBasket: A Winning Edge Against JioMart?

The Tata Group has apparently found its winning edge against Ambani's JioMart and might add this newfound opportunity to their shopping list...

Amazon Locks Head With The Music Industry: Twitch Letting Streamers Use Unlicensed Music!

The global e-commerce giant Amazon.com, Inc. (NASDAQ:AMZN) has upset the biggies of the music industry as one of its acquisitions have been...

Mobile Internet Speed In India: From Bad To Worse [REPORT]

Languishing. And la…g…g…i…n…g. The sorry state of the desi internet in India. In a rather sad turn of events,...

Google Boots Out 3 Immensely Popular Android Apps from Play Store: Questions About Content Policing Resurface

With such a flourishing wilderness of Android apps on the Google Play Store, there is every likelihood of encountering something seemingly innocuous...

Reliance Future Group Deal In The Soup: SIAC Orders To Put The Deal On Hold

When Reliance agreed to acquire Future Group for $3.4 billion, recently, the share of Reliance Industries Limited rallied on the stock market....

In-Depth: Dprime

Will ‘TikTok By Microsoft’ Be A Winner?

For the last two years, TikTok has been in the public eye for all sorts of reasons. First, it was the exploded...

Facebook Subscription Model: Looking Beyond Ad Dollars?

Seldom do job listings create a stir this gripping. However, when the job listing in question is a stealth post from Twitter,...

Will The Online Food Delivery Market in India End Up Becoming A Two-Horse Race?

It's pretty much evident that the food delivery space in India is all set to get riled up soon enough as one...

More Articles Like This