Goldman Sachs: Google paid Apple $9.5 billion in 2018 to be Safari’s default search engine

“Analysts at Goldman Sachs estimate more than 20 percent of Apple’s burgeoning services revenue comes from Google,” Sara Salinas reports for CNBC.

“Apple could need to make up the difference with a ‘Prime’ bundle, Goldman Sachs said in a note published Monday,” Salinas reports. “‘Apple will need to add mid to high single digits growth back to Services revenues through successful launch of the ‘Apple Prime’ bundle including original video that we expect to be rolled out this Spring/Summer,’ the firm said.”

“Google pays device makers like Apple traffic acquisition costs to be the default search engine,” Salinas reports. “Goldman Sachs estimates Google paid Apple nearly $9.5 billion in traffic acquisition costs (TAC) during calendar year 2018, representing a third of Apple’s profit in the segment.”

Read more in the full article here.

MacDailyNews Take: Why does Google pay Apple billions of dollars annually to be Safari’s default search engine? Because Apple has the best customers in the world and Google’s Android doesn’t. Google needs access to discerning people with means because they simply don’t have it with the great unwashed who settle for IP- and privacy-trampling iPhone knockoffs.

SEE ALSO:
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Why Google is willing to pay Apple $12 billion per year – October 24, 2018
Analyst estimates Google will pay Apple $9 billion this year to remain default search – September 28, 2018
Apple thrives by going upscale: It is Economics 101 – September 26, 2018
Apple’s App Store is destroying Google Play in services and subscriptions – April 18, 2018
Apple takes U.S. market share from Android, dominates with 8 iPhones out of 10 best-selling smartphones – July 26, 2018
Apple’s iPhone X made 5 times the profit of 600 Android OEMs combined – April 18, 2018
Apple’s iPhone captured 86% of global handset profits in Q417; iPhone X alone took 35% of global handset profits – April 17, 2018
Apple App Store users spent nearly double that of Google Play users in Q417 – January 26, 2018
Apple’s iOS continues to attract content apps first, despite smaller unit share – October 30, 2017
Bernstein: Google to pay Apple $3 billion this year to remain the default search engine on iPhones and iPads – August 14, 2017
Higher income U.S. states use Apple iPhones; lower income states use Samsung Galaxy phones – September 27, 2016
iOS users are worth 10X more than those who settle for Android – July 27, 2016
Apple’s App Store revenue nearly double that of Google’s Android – April 20, 2016
Poor man’s iPhone: Android on the decline – February 26, 2015
Study: iPhone users are smarter and richer than those who settle for Android phones – January 22, 2015
Why Android users can’t have the nicest things – January 5, 2015
iPhone users earn significantly more than those who settle for Android phones – October 8, 2014
Yet more proof that Android is for poor people – June 27, 2014
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Android users poorer, shorter, unhealthier, less educated, far less charitable than Apple iPhone users – November 13, 2013
IDC data shows two thirds of Android’s 81% smartphone share are cheap junk phones – November 13, 2013
CIRP: Apple iPhone users are younger, richer, and better educated than those who settle for Samsung knockoff phones – August 19, 2013
Newsflash: Apple sells premium products at premium prices to premium customers – October 23, 2012

13 Comments

  1. Goldman gets this completely wrong. Google is dependent on Apple, not the other way around.

    Google is one ‘Apple purchase of duckduckgo’ away from being so profoundly ****ed it will have to issue colostomy bags to all employees, investors, founders and their kids.

  2. As zombie implies above, this is money well spent by Google. It’s hard to overstate the value of being the default search engine on the most popular smartphone in the world, which also happens to have the most affluent customer base. I’ve never understood why Apple doesn’t acquire or develop a search engine.

    1. Because they’re getting $9.5 billion a year not to ; )

      I think it’s probably just a risk tolerance thing. They have exactly one shot at doing it right. They’d have to make sure it was up to the Google standard on day-one, to avoid having people immediately switch back to the Google offering, and not give Apple’s a second chance (like a lot of folks did with Maps).

      I think they thought Siri was a new way to access mobile search, and would eventually siphon a lot of mobile searches away from Google organically. Like with Maps, it didn’t quite work as well as it should have, and many are not giving it a second chance.

      Having said that, I think Apple will eventually do it one day.

      1. Maybe Apple should siphon the entire amount they receive from Google to R&D on their own Search tech. That would be the sweetest use for the funds for when Apple ever gets it right.

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