I’ve been using an iPhone for the past 8 years, and one question consistently pops into my mind: Why does Safari use Google as its default search engine? Especially when Apple has the capacity to launch its own? They could easily rival Google and Microsoft in this domain. Additionally, if Apple defaults to Google, why not consider Microsoft or other alternatives? Today, I found the answer to my burning questions and wanted to share it with you.
It’s widely known that Google is considered the default search engine for many reasons. One primary reason is the significant financial agreement between Apple and Google. This pact ensures that Google retains its position as the primary search engine on Apple’s iOS devices. Although the exact figures are not publicly disclosed by either company, a 2021 study by Apple Police indicated that financial advisor Bernstein suggested that Google might be paying Apple up to $10 billion annually to maintain this arrangement. The plot thickens, as recent investor notes suggest that Google’s annual payment to Apple might now range between $18 billion and $20 billion.
According to the reports by The Register, Financial advisor Bernstein recently published an analysis that put light on how Apple might be affected by the US government’s current antitrust case against Google. The Department of Justice is scrutinizing Google’s Information Services Agreement (ISA) with Apple, citing it as potential proof of Google’s dominant position in the search engine market.
“We believe there is a possibility that federal courts rule against Google and force it to terminate its search deal with Apple,” said Bernstein in the report seen by The Register. “We estimate that the ISA is worth $18B-20B in annual payments from Google to Apple, accounting for 14-16 percent of Apple’s annual operating profits.”
Bernstein highlights that Google distributes 22% of its overall ad earnings under its traffic acquisition costs (TAC). From this, they estimate that Apple could be taking in about 40%. This draws from Apple’s disclosed documents and a comprehensive review of Google’s TAC. In the courtroom, the DoJ speculates that Apple could be garnering close to $10 billion from its Information Services Agreement (ISA) with Google, but it’s essential to note that their data originates from third-party sources.
“Importantly, Google is on trial, not Apple, and Apple could (in theory) partner with another search engine to be the default (and/or retain the agreement with Google outside the US),” the report states. “One more likely scenario is that Apple offers a choice screen. We note that Apple controls access to its installed base, which generates ~$60B + in advertising revenues, and accordingly, we believe that Apple would continue to command a commission (in the 25-30 percent range) for providing access to those search advertising revenues.
“Moreover, introduction of a choice screen could offer Apple the opportunity to potentially launch its own search engine as an option – something it could likely not do today without raising the eyebrows of regulators,” the Bernstein report adds.
Last month’s reports suggest that Microsoft is considering selling its Bing search engine to Apple. If this happens, Bing might replace Google as the default search engine for iOS devices.
According to the reports by Macrumors’s Experts, there’s a significant chance that Google could lose the case, which could have a major impact on Apple. However, a decision in this case is not anticipated until next year. Moreover, the likelihood is that any outcome will be prolonged due to an extensive appeals process.
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