What Does Google Pay Apple For? Analysis

In the dynamic world of technology, partnerships between industry giants often arrange themselves in unexpected configurations. One of the most notable examples of such collaboration is the deal between Google and Apple. Yes, you read that right, it's not a joke. How is this possible? It turns out that both companies are reaping some rather interesting benefits from it. Under it, Google, known as the leader in search engines, is handing over a significant portion of its advertising revenue to Apple. What exactly is this all about?

Safari and Google: what do the two search engines have in common?

In the Safari browser, which is an integral part of Apple products such as the iPhone, iPad and Mac, Google is the default search engine. Google makes money from the ads placed in the search results, and Safari is one of the main platforms on which these ads are displayed.

This positioning of Google in Safari is no accident. Safari, being the default browser on Apple devices, provides Google with access to the huge user base that searches the internet every day. For Google, a presence in Safari means increased chances of ad clicks and, therefore, higher revenues. Apple, on the other hand, benefits financially from this situation by receiving a percentage of Google's revenue.

Apple reportedly receives around 36% of all revenue that Google generates from ads displayed in Safari search results. Given the scale of both companies and the global reach of their products, this amount is significant. Apple's products are used all over the world, which translates into a huge number of searches via Safari.

It is therefore a win-win deal. Google gains access to a broad user base, thereby increasing its potential advertising revenue, while Apple reaps significant financial benefits from this collaboration. As in many cases in the business world, the key motivating factor for both parties to this deal is, of course, finance.

Antitrust issues

An interesting aspect of this agreement is that it has been criticised by the US Department of Justice. It has accused Google of using its financial power to maintain its dominant position in the market. By paying Apple to remain the default search engine, Google is securing access to billions of Apple device users worldwide. This is a highly controversial issue that continues to be opposed by many Apple users.

In 2021, the amount Google was expected to pay Apple was around $18 billion. While the exact figures for the revenue Google receives from Safari ads are not publicly known, it can be assumed that they are very high. Google, which reported total revenue of $279.8 billion in 2022, largely derived from advertising, is surely passing on a significant portion of that revenue to Apple. Will we ever know exactly how much this sum is? That remains to be seen.

The financial symbiosis between Google and Apple demonstrates the importance of strategic partnerships in the world of technology. For Google, the deal guarantees the presence of its search engine in Apple's ecosystem, which is key to maintaining its position in the market. For Apple, it is a source of significant revenue that strengthens its financial position. The two companies, despite being competitors in many areas, find common ground in a collaboration that unfortunately does not please everyone. In the business world, however, there is no room for sentiment. What counts are contracts worth millions of dollars and the certainty of staying in the market, even at the expense of getting along with the competition.