Report: Google is the default iPhone search engine because it paid Apple $1 billion
Oracle's lawsuit against Google is revealing tons of financial details, like Google's revenue-sharing agreement with Apple.
By Caitlin McGarry
Apple ditched Google Maps for its own native app in 2012, but the company is sticking with Google for the iPhone’s default search engine because Google pays Apple a ton of money for the privilege: $1 billion, to be exact.
That closely guarded sum was spilled in court transcripts from Java software maker Oracle’s lawsuit against Google, according to a Friday Bloomberg report. Oracle claims Google used Java to build its Android operating system without paying, and has been fighting the company for damages since 2010. Now Oracle is airing all of Google’s business for the world to see.
Why this matters: Apple allows iPhone users to change the default from Google to another search engine in Safari, but Google is still the default. The company reportedly pays Apple a percentage of the revenue it makes from searches on iPhones to keep it that way. In 2014, that percentage amounted to $1 billion, though it’s unclear exactly how the revenue split breaks down. In a court transcript, a witness pegs the split at 34 percent, though it’s uncertain whether Google pays 34 percent or keeps 34 percent. Apple has admonished Google for violating user privacy with practices like mining emails for keywords to generate ad revenue. Now we know that Apple financially benefits from Google’s ad-targeting practices.
Both Apple and Google fought to keep the revenue-sharing agreement details under wraps, but not before the number was included in a court transcript.
“The specific financial terms of Google’s agreement with Apple are highly sensitive to both Google and Apple,” Google said in a court filing on Jan. 20, according to Bloomberg. “Both Apple and Google have always treated this information as extremely confidential.”
Now that the cat’s out of the bag, it could affect both companies’ business agreements going forward.
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