Google willing to cough up $15 billion to remain default search engine on Apple's ecosystem

Google pays big to remain default search engine on Apple's ecosystem

One of the advantages of being a brand with a strong recall value is that you get to dictate what your products and experiences carry. If you are a hardware and software company like Apple, you get to dictate what goes into the minutia of what you make.

One of the key experiences in software is search. It's likely the first thing that user's do when they get a new device or run into a problem or look for something online. So, it makes sense that there is a value attached to being a primary search engine on one of the biggest ecosystems in the world.

An ecosystem so big that Google is willing to pay Apple $15 billion to stay the primary way to search on Apple devices.

As per a report by Ped30, Analysts from Bernstein Research estimated that payments from the search giant to the hardware maker totalled $10 billion in FY 2020. That figure was derived from Apple's public filings and analysis of Google's traffic acquisition costs.

According to the current forecast, Google's payments to Apple for the search engine spot will likely reach $15 billion in FY 2021. The research firm believes that Google is paying such a high amount to keep Microsoft and its competing search engine Bing from outbidding it.

There are some noted risks to this however, one of them is a regulatory risk which prevents Google from paying to stay in the race and opens it up to everyone for fair competition.

The other risk, is that Google themselves decide to renegotiate for a lower price which is possible because the payments are going to skyrocket to nearly $20 billion in FY 2022.

Either way, the current status quo does not look like it will change anytime soon, till Google coughs up the money.