Google Reportedly Pays Apple $8-12 Billion Per Year to be Default iOS Search Engine

https://www.macrumors.com/2020/10/25/google-apple-search-default-8-12-
billion/

The United States Justice Department is targeting a lucrative deal between 
Apple and Google as part of one of the U.S. government's largest antitrust 
cases, reports The New York Times.

On Tuesday, the Justice Department filed an antitrust lawsuit against 
Google, claiming the Mountain View-based company used anticompetitive and 
exclusionary practices in the search and advertising markets to maintain 
an unlawful monopoly.

In 2017, Apple updated an agreement to keep Google's search engine as the 
preselected option on Apple devices. The New York Times reports that Apple 
receives an estimated eight to 12 billion dollars per year in exchange for 
making Google the default search engine on its devices and services, 
including the iPhone and Siri. This is believed to be the single biggest 
payment Google makes to anyone, and it accounts for 14 to 21 percent of 
Apple's annual profits.

Prosecutors claim that the deal is representative of illegal tactics used 
to protect Google's monopoly and stifle competition. According to the 
Justice Department, almost one half of Google's search traffic now comes 
from Apple devices, and the prospect of losing the agreement has been 
described as "terrifying" and a "code red" scenario within the company. 
Google's search traffic is integral to its business model due to its 
system of ads.

Apple is likewise coming under fire for facilitating anticompetitive 
behavior by acquiescing to the deal and extracting more money with regular 
renegotiations. Although the two companies are competitors in Silicon 
Valley, the agreement is said to be part of "an unlikely union of rivals."

The Justice Department's complaint cites a senior Apple employee's remark 
from 2018 which said that "our vision is that we work as if we are one 
company."

The legal intervention poses a threat to a significant chunk of Apple's 
revenue, but it is a bigger danger for Google, which would seemingly have 
no way to replace the traffic it would lose. The New York Times speculates 
that such a breakup could push Apple to acquire or build its own search 
engine, which could in turn pose an even greater threat to Google.

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Tags: Google, nytimes.com, antitrust


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