Google Is Paying A High Price to Apple Every Year

Apple refused Justice Department’s request to comment on the suit, and the Justice Department accused Apple for nothing. At the same time, Google rebutted the basis of the lawsuit, arguing that consumers use their products because it’s the best, and they can easily use other products besides its own.

Last week, Kent Walker, Chief Legal Officer of Google, commented in his blog, “Our agreements with Apple and other device makers and carriers are no different from the agreements that many other companies have traditionally used to distribute software.”

The two companies reached the agreement in 2005, and Google Search Engine became the default search engine of Safari. The Steve Jobs was the CEO of Apple at that time. According to the Department of Justice, the scale of the deal was enlarged after the launch of iPhone, two years later.

Details of the agreement remains a secret to the public, and the information that Google is paying Apple a large amount of money, was revealed to the public in an unrelated lawsuit in 2016. In the court in 2016, the two companies mentioned that as a part of the agreement, Apple received a billion dollars from Google in 2014.

According to analysts, the amount of the payment increased in a large scale since 2014, but the specific amount differed every year. The Justice Department pointed out that the annual amounts ranged from 8 billion to 12 billion, which accounted for 15% to 20% of Apple’s profit.

Apple mentioned, up to September, 2019, their profit of the fiscal year is 55.26 billion dollars, which is estimated to increase slightly compared with last year. And the company is going to release its report this Thursday.

Google will also face considerable risk if the prosecution from Justice Department end their deal. It is reported that nearly half of Google Search’s traffic comes from Apple devices. Analysts including Sacconaghi estimated, Apple may take over DuckDuckGo to expand its search service, and compete for more advertisement revenue. DuckDuckGo is a small search engine that emphasizes on privacy protection like Apple. It seems that all those moves will bring Google a powerful potential competitor. At present, Google is in an overwhelming leading place at the field of search engine, its competitors include Microsoft Bing, DuckDuckGo and so forth.