Google pays Apple $1 billion a year…


…to be the default search engine on iOS.

Like their relationship with Samsung, Apple and Google remain rivals despite the fact that they actually kind of work together. In fact, Apple will be earning a whopping $1 billion from Google this year. The reason? Because Google is the default search engine on iOS.

Previously, analysts believed that Apple and Google’s agreement was based on a revenue-sharing model. Apple collected 75 percent of every dollar that Google made through search advertising. But Morgan Stanley Analyst, Scott Devitt, believes that would be something Apple wouldn’t do. Instead, he thinks the companies have a “fee per device” agreement, wherein Google actually gives money to Apple for every iOS device sold. This agreement hedges Apple’s bet against people that search using on mobile Safari — a method wherein Apple would not earn anything through those ads in their revenue-sharing agreement.

Devitt also believes that despite $1 billion seeming like a very high amount to pay for Google, it’s actually a very small amount for a virtual monopoly on mobile search. Google currently controls 95% of mobile search, which includes all iOS and Android devices. Suffice to say, it looks like this deal isn’t going anywhere anytime soon.

[via Business InsiderTUAW, image via 401(K) 2013]

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