Did you know Google paid $10 billion to Apple in 2020 to stay on as their default search engine? If you didn't, it should blow your mind 50% more knowing that Google is paying $15 billion to Apple in 2021 to continue as the default search engine on the iPhone, iPad, and Mac.
In a new investor note seen by Ped30, Bernstein analysts estimate that Google will be paying Apple a huge $15 billion in 2021 to remain as the default search engine... but somewhere between $18 billion and $20 billion for the rights in 2022.
Bernstein analyst Toni Sacconaghi notes that Google is probably splashing the cash to "ensure Microsoft doesn't outbid it". The analysts continue:
"We see two potential risks to GOOG's payments to AAPL: (1) regulatory risk, which we believe is real, but likely years away; we see a potential 4-5% impact to Apple's gross profits from an adverse ruling; & (2) that Google chooses to stop paying Apple to be the default search engine altogether, or looks to renegotiate terms and pay less. We have noted in prior research that GOOG is likely paying to ensure Microsoft doesn't outbid it. That said, with payments likely to approach $18 - $20B in FY 22, it not implausible that Google could revisit its strategy".
