Google Could Pay Apple More Than US$1 Billion To Remain Default iOS Search Engine

According to a new report from Morgan Stanley, Google could pay Apple more than US$1 billion in 2014 to remain the default search engine on iOS. In 2009, Google paid only US$82 million for the same privilege.

According to the report titled “The Next Google Is Google” and the table below, Google pays Apple a certain amount for every iOS device sold - this is called the Traffic Acquisition Cost (TAC) rate. Looking at the table, in 2009, the TAC rate per iOS unit was US$2. This increased to US$3 in 2011, and has steadily increased since then, hitting US$3.3 this year, and set to increase to US$3.5 next year. At Apple's current projected growth rate, Google will have to pay Apple US$2 billion by 2018.

In his report, analyst Scott Devitt states that it's actually a pretty good deal for Google. Devitt estimates that with Apple and Google's own Android platform combined controlling about 95% of the mobile market, "paying US$1 billion a year for a monopoly on the most lucrative online business in the world is a no-brainer."

Google is also the default search engine on Apple’s Safari for Mac, and is also part of Safari’s contextual menu (“Search with Google.”)

Source: Morgan Stanley