Google pays Apple $18 billion to $20 billion per year to be Safari’s default search engine – analyst

Alphabet pays Apple $18 billion to $20 billion per year for Google to be Safari’s default search engine, research and brokerage firm Bernstein estimates.
DOJ antitrust lawsuit targets Google’s multibillion-dollar default search pact with Apple
Paul Kunert for The Register:
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Google pays Apple between $18 billion to $20 billion a year to remain the dominant search engine in the iPhone, according to a financial analyst that thinks this deal, and others like it, are now at risk.
“We believe there is a possibility that federal courts rule against Google and force it to terminate its search deal with Apple,” said Bernstein in the report sent to The Register. “We estimate that the ISA is worth $18B-20B in annual payments from Google to Apple, accounting for 14-16 percent of Apple’s annual operating profits.”
Apple gives limited information on the sub-segments in its Services division, yet Google reports the money it sends to Apple under its traffic acquisition costs (TAC) to distribution partners. Bernstein says Google pays out 22 percent of total ad revenue on TAC and estimates Apple likely receives around 40 percent of this.

Patricia Battle for TheStreet:
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According to Bernstein’s report, even if Apple does end up losing its billion-dollar monthly income from Google as a result of possibly losing the case, it won’t have a huge economic impact on Apple.
“Importantly, Google is on trial, not Apple, and Apple could (in theory) partner with another search engine to be the default (and/or retain the agreement with Google outside the US),” the report states.
Bernstein also notes that Apple might also end up offering a choice screen for consumers which could open the door for Apple to launch its own search engine as one of the options, something that has been rumored to be an interest of Apple for years.

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MacDailyNews Take: Apple, which is said to be building its own demand-side advertising platform, could make far more by launching its own search engine, as long as it’s comparable to Google’s. Yes, it’ll be difficult to give up $20 billion annually in easy, no-work-required money, but it’ll be worth it in the long run.
As to why Alphabet pays Apple so much to get Google in front of Apple device users:
It’s all about demographics. Apple’s customers are the most coveted because, beyond taste, they have money and the proven will to spend it.
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. – MacDailyNews, February 12, 2019

The bottom line: Those who settle for Android devices are not equal to iOS users. The fact is that iOS users are worth significantly more than Android settlers to developers, advertisers, third-party accessory makers (speakers, cases, chargers, cables, etc.), vehicle makers, musicians, TV show producers, movie producers, book authors, carriers, retailers, podcasters… The list goes on and on.
The quality of the customer matters. A lot.
Facile “analyses” that look only at market (unit) share, equating one Android settler to one iOS user, make a fatal error by incorrectly equating users of each platform one-to-one.
When it comes to mobile operating systems, all users are simply not equal. – SteveJack, MacDailyNews, November 15, 2014

Android is pushed to users who are, in general:
a) confused about why they should be choosing an iPhone over an inferior knockoff and therefore might be less prone to understand/explore their devices’ capabilities or trust their devices with credit card info for shopping; and/or
b) enticed with “Buy One Get One Free,” “Buy One, Get Two or More Free,” or similar ($100 Gift Cards with Purchase) offers.
Neither type of customer is the cream of the crop when it comes to successful engagement or coveted demographics; closer to the bottom of the barrel than the top, in fact. Android can be widespread and still demographically inferior precisely because of the way in which and to whom Android devices are marketed. Unending BOGO promos attract a seemingly unending stream of cheapskate freetards just as inane, pointless TV commercials about robots or blasting holes in concrete walls attract meatheads and dullards, not exactly the best demographics unless you’re peddling muscle building powders or grease monkey overalls.
Google made a crucial mistake: They gave away Android to “partners” who pushed and continue to push the product into the hands of the exact opposite type of user that Google needs for Android to truly thrive. Hence, Android is a backwater of second-rate, or worse, app versions that are only downloaded when free or ad-supported – but the Android user is notoriously cheap, so the ads don’t sell for much because they don’t work very well. You’d have guessed that Google would have understood this, but you’d have guessed wrong.
Google built a platform that depends heavily on advertising support, but sold it to the very type of customer who’s the least likely to patronize ads.
iOS users are the ones who buy apps, so developers focus on iOS users. iOS users buy products, so accessory makers focus on iOS users. iOS users have money and the proven will to spend it, so vehicle makers focus on iOS users. Etcetera. Android can have the Hee Haw demographic. Apple doesn’t want it or need it; it’s far more trouble than it’s worth. – MacDailyNews, November 26, 2012
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