This is How Much Google Paid Apple to Be Its Default Search Engine

Millions of users rely on Google Search has default search engine and Apple was paid to make sure iPhone users do.

Google has paid a hefty price to make sure it the go-to search option for Apple users.

(Photo: iStockphoto)

To remain the default search engine on iOS devices, Google paid Apple nearly $9.5 bn in traffic acquisition costs (TAC) in 2018, thereby contributing massively to the iPhone maker's services revenue, estimates Goldman Sachs.

Apple is focusing on services revenue amid slowing iPhone sales in emerging markets like China.

According to a report in CNBC on Tuesday, what Google paid Apple in TAC represented a third of Apple's profit in the segment.

Goldman Sachs warned that while the fees paid by Google will continue to make up a large portion of Apple's services revenue into 2019, the rate of growth will be slower.

The firm suggested that to boost its revenue in the services segment, Apple needs to be less reliant on Google's contribution.

"Apple will need to add mid to high single digits growth back to Services revenues through successful launch of the 'Apple Prime' bundle including original video that we expect to be rolled out this Spring/Summer," Goldman Sachs was quoted as saying in a note on Monday.

Google pays device makers like Apple traffic acquisition costs to be the default search engine.

In late January 2019, Apple found out about these and pulled the plug on apps from Facebook and Google.

The company said that both Facebook and Google, at least some of its developers, were resorting to underhand tactics to coerce some users in parting with their private data, in some cases without their full knowledge or consent to develop their apps.