Google Could Pay Apple $15B To Keep Its Search Engine The Default On Safari

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Google Could Pay Apple $15B To Keep Its Search Engine The Default On Safari

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Apple search for onsite and in apps has become an important feature for the company.

Google could pay more than $15 billion to Apple this year to keep its search engine the default on Safari -- up from $10 billion in fiscal-year 2020.

A Bernstein analyst estimated the latest deal with Google could contribute to the growth of Apple’s services about 850 basis points (BPS) -- a common unit of measurement for interest rates and other percentages in finance -- and amount to about 9% of the company’s gross profits.

In 2017, it’s estimated that Google paid Apple about $3 billion to remain the default search engine on iOS devices, but search for Apple has become so much more.

There are two potential risks to Google’s payments to Apple. The first points to regulatory risk. They are real, but likely years away. There’s also a potential impact of between 4% and 5% to Apple’s gross profits from an adverse ruling.

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The other challenge is that Google decided to stop paying Apple to be the default search engine, or is looking to renegotiate terms and pay less. In prior research, the analyst notes that Google likely does this.

Safari holds 53% of mobile browser market share and 18% of desktop browser market share in the U.S.

In 2020, the companies reported that Apple began stepping up efforts to increase the development of its own search technology.

Apple recruited several search experts in recent years. It hired Google’s head of search, John Giannandrea, in April 2018, and now has several job openings related to search -- from software engineer and senior machine learning engineer in search science to senior machine-learning engineer.

Those efforts could point to other search capabilities.

On Monday the company announced the acquisition of Primephonic, a classical music-streaming service that offers a listening experience with search and browse functions optimized for classical, premium-quality audio, handpicked expert recommendations, and extensive contextual details on repertoire and recordings.

Apple Music subscribers, with the addition of Primephonic, gain an improved classical music experience, beginning with Primephonic playlists and exclusive audio content.

In the coming months, Apple Music Classical fans will get a dedicated experience with the best features of Primephonic, including better browsing and search capabilities by composer and by repertoire, detailed displays of classical music metadata, plus new features and benefits.

Primephonic is no longer available for new subscribers.

Apple will take the company offline beginning September 7, and then plans to launch a dedicated classical music app next year that combines Primephonic’s classical user interface with added features.

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August 30, 2021 at 03:47PM