Why Google Pays Apple $1 Billion a Year

Google is expected to pay an estimated $1 billion to Apple in 2014 to keep its search engine as the default on iOS devices because, well, Google makes a huge portion of its mobile revenue from iPhones and iPads — enough to make rivalries disappear. Last year, Google paid $417 million for the exclusive search rights, up from just $82 million in 2009. Given the monster growth track of Apple devices, as well as the per-device rate Apple charges Google for prime search real estate, the exclusivity cost is expected to double over the next two years. And even though it seems a strange partnership for the sometimes rivals — they're competing over phone software, and Google's results show up in Apple's competing browser — the iPhone and iPad business is lucrative enough for Google's search advertising business that it might even be considered a steal.

As of March, something like 80 percent of Google's phone-search profits came from Apple, with only 20 percent coming from Android devices, per calculations from Apple Insider's Daniel Eran Digler. Google doesn't break down these numbers by device type, but in a court filling Google said it made $550 million in Android search revenues from 2008-2011. In 2011 alone, Google reported a $1 billion run rate for mobile revenues, which includes search revenues on Android and iOS, as well as sales from its Google Play app store.

Read more at The Atlantic Wire.

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