Google pays Apple $3 billion to be on iPhone

Mountain View, California: According to the US-based research and brokerage firm Bernstein’s claims, Google is paying Apple $3 billion this year to remain on the iPhone as its default browser.

The firm made the claims about the search engine in a note to investors on Monday, it believes that Google has increased the amount from $1 billion, last year to $3 billion.

Apple has been attempting to sell its services business as a quickly growing segment of the company, noting that it expects that branch alone will soon be as large as a Fortune 500 company, according to a report by CNBC.

“Court documents indicate that Google paid Apple $1B in 2014, and we estimate that total Google payments to Apple in FY 17 may approach $3B,” Bernstein analyst A.M. Sacconaghi Jr. said.

“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,” he added. Bernstein sees pros and cons in the payments.

Sacconaghi said that Google might decide to back away from paying Apple any licensing fees if it feels confident enough that its search engine is so popular Apple won’t include any other option by default.
Bernstein has an outperform rating on Apple with a price target of $175.

Apple’s iOS devices contribute about 50 per cent to Google’s mobile search revenue, Sacconaghi noted.