According to experts, Google would pay Apple $15 billion (approximately Rs. 1,10,718 crores) in 2021 to remain the default search engine for iPhone, iPad, and Mac. The cost of keeping Google as the default search engine for the Safari browser has reportedly increased once again, and it is expected to rise much more in 2022. It’s commonly assumed that Google pays Apple a large sum of money each year to maintain its search engine’s supremacy, which includes outbidding Microsoft.
According to Ped30, Bernstein analysts believe that Google’s payout to Apple to remain as Safari’s default search engine in 2020 would be about $10 billion (roughly Rs. 73,873 crores), up from the prior estimate of $8 billion (roughly Rs. 59,098 crores). According to the analysts, “Apple’s public filings as well as a bottom-up study of Google’s TAC (traffic acquisition costs) payments” indicate that Google may pay Apple almost $15 billion in fiscal year (FY) 2021, contributing 9% to the company’s gross profit.
According to the experts, Google may reconsider its plan if it is estimated that it would have to pay Apple between $18 billion (approximately Rs. 1,32,876 crores) and $20 billion (about Rs. 1,47,641 crores) in FY22. They claim that there are two potential risks in this type of arrangement: a regulatory risk that is likely years away but could reduce Apple’s gross profit by 4 to 5% if a ruling is made against it, and a legal risk that is likely years away but could impact Apple’s gross profit by 4 to 5% if a ruling is made against it. Second, Google could seek to renegotiate its conditions for a lower cost or simply cease paying.
Because Google’s Bing search engine is a possible runner-up for being Safari’s default search engine, it’s conceivable that Google continues to pay Apple to outbid Microsoft.
Apple and Google’s agreement to use Google’s search engine on iOS devices has been criticized in the past. This transaction, according to the UK Competition and Markets Authority, presents “a major barrier to entrance and expansion” for Google’s competitors in the search engine industry. In addition, Apple is said to be ramping up its attempts to build its own search engine to compete with Google. While doing so may result in Apple missing out on the annual payment it receives from Google, it may make things easier in the event that laws stymie the acquisition.