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Is Google Paying Apple Up To $1 Billion to be their Default Search Engine?

February 11, 2013 - Written By Alexander Maxham

According to Steven Devitt from Morgan Stanley, in a note where he praised Google, that the search giant could be paying their competitor up to $1 billion per year to be their default search engine in iOS. This is so Google can be the default search engine on the iPhone, iPad, and iPod Touch. Business Insider first reported this, and the analyst said that “the next Google is Google,” basically saying that the company is continuing to prove itself in an everchanging market. Devitt also believes that Google’s search business has more room to grow in expanding markets and subsidiaries. Including YouTube which could generate as much revenue as $20 billion by 2020. Which would make the $1 billion to Apple look like chunk change.

Devitt did estimate that Google might be paying their largest competitor, Apple, up to $1 billion per year and that figure is expected to rise over the next few years. Some earlier reports claimed that the two tech giants in Cupertino and Mountain View, were involved in a revenue sharing deal, but this analyst does not believe this is the case because it would be very messy.

Instead, Devitt thinks that Apple would be more likely to do a fee per iDevice agreement for the benefits of upfront payments and making accounting much easier. He also believes that this very unlikely partnership has allowed Google to have an estimated 95% of the mobile search market today. The Business Insider reports

“when you consider that Apple and Android are swallowing the mobile market, paying ~$1 billion per year for a monopoly on the most lucrative online business in the world is a no-brainer.”

So there you have it, Google might be paying to be the default search engine on iPhones. But that’s probably the only way they could remain on an iPhone out-of-the-box. Since Apple has now gotten rid of maps, and YouTube, which you now have to download from the App Store. The amount of money that Google is making, they can afford to pay $1 billion to Apple.

Do you think this is really a deal between Apple and Google? Let us know what you think in the comments below.