During a recent note to investors, Bernstein estimated that Google"s licensing payment to Apple could close in on $3 billion during the 2017 financial year. These payments reportedly go towards keeping its search engine the default option in iOS.
Because Google paid the Cupertino technology giant $1 billion in payments in 2014 according to court documentation released last year, Bernstein analyst A.M. Sacconaghi Jr. noted:
"Given that Google payments are nearly all profit for Apple, Google alone may account for 5% of Apple"s total operating profits this year, and may account for 25% of total company OP growth over the last two years."
However, the firm noted that there might be future downsides to these arrangements. Google could become confident enough to stop these payments if it believes Apple would not change the default in its operating system; as Google still remains the most popular search provider in the world. Even though Siri is powered by Microsoft"s Bing service, it still hasn"t made the jump to become the default in Safari and it doesn"t seem to be an imminent threat to the dominance of Google at this point in time.
According to the firm, Apple iOS devices accounted for 50% of Google"s mobile search income, pointing to this agreement continuing for some time. Recently Apple reported profits of $8.7 billion for the third quarter of 2017, suggesting that the proverbial golden goose from Google could bolster these profits even further as time goes on.
Apple is also readying its new iPhone that will launch later this year. The device is reportedly being revealed in September according to rumors and will have a bezel-less display amongst other advanced features.
Source: CNBC