• Nigerian/African Tech
  • Start Up
  • Internet
    • App
    • Mobile
    • Software
  • Gadgets
  • Money
  • Video
Tech News, Magazine & Review WordPress Theme 2017
  • Home
  • Africa
  • Business
  • Video
  • Metaverse
  • AI
  • Gadgets
  • Earnings
  • Tips
Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors
  • Home
  • Africa
  • Business
  • Video
  • Metaverse
  • AI
  • Gadgets
  • Earnings
  • Tips
Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors
TechBooky
Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors
Home Commerce

Google Accounts For a Huge Amount Of Apple’s Profit

Olagoke Ajibola by Olagoke Ajibola
September 8, 2021
Share on FacebookShare on Twitter

Each year, Alphabet Inc. the parent company of Google and several subsidiaries pays for the placement of Google as the default search engine in browsers. It records these payments under “traffic acquisition costs”, or TACs, in the income statement. Last year, Alphabet paid nearly $33 billion in TACs, and one company benefited greatly from these payments: Apple. Apple raised about $ 10 billion in TAC payments last year, according to estimates by Bernstein analyst Toni Sacconaghi. He expects the figure to rise to $15 billion this year, and it could reach $20 billion next year. He estimates that Google’s payments will account for approximately 9% of Apple’s gross profit in the 2021 fiscal year. Based on these facts, here are few questions you’ll agree investors need to ask.

Also On TechBooky

Why Should Brands Focus On Social Commerce?

The Role Of Mobile Payments In The Future Of Commerce

5 Cyber Monday Marketing Ideas & Tips To Increase Sales

5 Black Friday Marketing Strategies You Can Use Today

E-Commerce Software Firm, Carbon6 Technologies Raises $66M In Equity, Debt, Acquires 16 Companies

What is the upper limit Alphabet can pay?

The reason why Alphabet continues to pay more money year after year is that the amount of search traffic and ad clicks on smartphones continues to grow tremendously. 68% of all search ad clicks occurred on smartphones in the second quarter, according to data from Merkle. That number was less than 60% two years ago, and less than 40% in 2016. Thanks to the standard search engine in Apple’s Safari mobile browser, Google gets an even higher share of ad clicks from smartphones – 71%. To top that, these clicks are increasingly valuable. Google’s search ad spend on smartphones continues to grow as desktop ad spend falls.

Given Apple’s dominant position in the smartphone industry – it has around 25% of the global installed base and more than half of the valuable US market – Google must ensure that it remains the default search engine on iOS. But it would not make sense for Google to pay more in TAC than it generates from search ads. This figure was estimated at $ 25 billion for 2020 in the middle of last year, and will probably be revised higher after Google’s performance in the second half of the year. Based on Google’s growth rate in 2021 and the continued shift to digital advertising and mobile, it could be close to $ 40 billion to $ 50 billion this year. As more advertising spend shifts to mobile, the number will continue to outpace Google’s overall revenue growth in search ads. It sets a pretty upper limit on Google’s willingness to pay. But at some point, Google will look to set a ceiling on its TAC with Apple, and growth will slow.

Will regulators have a problem with Google’s strategy?

Another reason Google continues to pay Apple year after year is to protect its position as the default search engine. Rival Microsoft also has deep pockets, and it can still spend quite a bit and make a deal with Apple profitable. There are also several smaller search engines seeking a place like Apple’s standard search engine. Regulators may view Google’s tactics as restrictive of competition. By paying into the likes of Apple’s pockets, Google prevents smaller competitors from having a chance to win.

With the increased control that regulators are giving large technology companies these days, the chances of a crash increase. And as payments increase, so do they. Sacconaghi said he believes any regulatory changes are still many years away, but they could have a negative impact of 4% to 5% on Apple’s gross profit if it is an unfavorable decision.

For Google, it is unclear how much damage it would cause if it could no longer guarantee the status of the default search engine. Many users are likely to change the standards to keep Google, but many more will not if Microsoft’s relative success on desktop devices is any indication. Bing has a market share of 12%, in line with Microsoft’s Edge browser market share.

Should Apple Create Its Own Search Engine?

Apple is currently collecting billions from Google just to change a few lines of code in the Safari browser. But if Apple developed or bought its own search engine and made it standard, it could potentially generate even more revenue than the billions that come from Google. It’s unlikely that Apple would be able to capture all of Google’s revenue opportunities on iOS. First and foremost, there will be users switching to Google products anyway. Take a moment to consider how many people download Google Maps and Gmail for iPhone instead of using Apple’s standard apps.

Secondly, Apple probably does not have the same revenue-generating capabilities as Google. Google has built an ecosystem of advertising tools for both supply and demand. It has millions of active advertisers already using these tools. And it has lots of user data it can use to ensure that the right ad appears in front of the right person at the right time. Google’s dominance across mobile and desktop computers ensures that it can re-target ads even when users switch devices. In short, a Google ad, even a search ad, is more valuable than an ad on most other platforms.

As long as Google continues to pay Apple more and more every year, the latter should probably be happy to collect the high-margin checks. But Apple should be ready to deploy its own solution if regulators crackdown on technology companies or Google reconsiders the strategy.

Related Posts:

  • Google To Spend $15B To Remain Default Search Engine On iOS
    Google To Spend $15B To Remain Default Search Engine On iOS
  • As Apple Build Its Search Engine , It May Face A Google-Like Antitrust In Future
    As Apple Build Its Search Engine , It May Face A Google-Like…
  • Google Launches Its Wallet Services In South Africa
    Google Launches Its Wallet Services In South Africa
  • Google Says It Is Bing’s Most Searched Website
    Google Says It Is Bing’s Most Searched Website
  • Neeva Announces Shutdown, Dimming Hopes Of Taking On Google
    Neeva Announces Shutdown, Dimming Hopes Of Taking On Google
  • Google Pixel 6 Will Be Assembled in China As COVID-19 Hinders Move To Vietnam
    Google Pixel 6 Will Be Assembled in China As COVID-19…
  • Why Contactless Payments Are Here To Stay
    Why Contactless Payments Are Here To Stay
  • Google Upgrades Its News And Search Platforms With More Contents
    Google Upgrades Its News And Search Platforms With More…
Tags: androidappAppleartificial intelligencegadgetgooglegovernmentiosiphonemobile
Olagoke Ajibola

Olagoke Ajibola

Olagoke Ajibola is a creative writer and content producer with an eye for details and excellence. He has a demonstrated history of telling stories for TV, Film and Online. Aside from being fascinated by the power of imagination, his other interest are travel, sport, reading and meeting people.

BROWSE BY CATEGORIES

Receive top tech news directly in your inbox

Loading

Recent

Finance / Managers – Ready Examples to Fill (proposal templates)

Finance / Managers – Ready Examples to Fill (proposal templates)

June 5, 2023
Nvidia Achieves $1 Trillion Market Cap, Joins Elite Group Of Tech Companies

Nvidia Achieves $1 Trillion Market Cap, Joins Elite Group Of Tech Companies

May 30, 2023
Africa Data Centres Plans Expansion To Ghana

Africa Data Centres Plans Expansion To Ghana

May 30, 2023
YouVerify Set Up Shop In Kenya To Lead KYC Automation

YouVerify Set Up Shop In Kenya To Lead KYC Automation

May 30, 2023
Inside The Hack That Cost Crypto Exchange Patricia $2m

Inside The Hack That Cost Crypto Exchange Patricia $2m

May 30, 2023
How Employers Are Creating Inclusive Remote Work Environments

How Employers Are Creating Inclusive Remote Work Environments

May 29, 2023
Google Has Started Allowing Users Experience Its Generative AI Capabilities In Search

Google Has Started Allowing Users Experience Its Generative AI Capabilities In Search

May 26, 2023
TikTok Grants Oracle Full Access To Code: A Strategic Move Explained

TikTok Grants Oracle Full Access To Code: A Strategic Move Explained

May 23, 2023
Neeva Announces Shutdown, Dimming Hopes Of Taking On Google

Neeva Announces Shutdown, Dimming Hopes Of Taking On Google

May 22, 2023
G7 Urges Global AI Regulation And Emphasizes AI’s Creative Potential

G7 Urges Global AI Regulation And Emphasizes AI’s Creative Potential

May 22, 2023

Browse Archives

June 2023
M T W T F S S
 1234
567891011
12131415161718
19202122232425
2627282930  
« May    

About Us

TechBooky

TechBooky is a social Tech blog with a special focus on the budding African Technology sector. TechBooky is currently based in Abuja, Nigeria.

Subscribe to TechBooky

Enter your email address to subscribe to TechBooky and receive notifications of new posts by email.

Join 17,655 other subscribers.

Receive top tech news directly in your inbox

Loading

Popular Tags

AI (291) amazon (95) android (294) app (640) Apple (487) artificial intelligence (311) business (386) china (117) cloud (137) cryptocurrency (162) ecommerce (111) enterprise (253) facebook (475) gadget (473) gaming (167) google (571) government (392) guest post (109) instagram (140) internet (374) ios (256) iphone (215) microsoft (274) mobile (305) new feature (314) nigeria (281) privacy (141) research (134) samsung (145) security (381) smartphone (245) social media (696) software (437) startup (272) streaming (144) telecom (159) tips (347) transport (107) twitter (231) united states (201) users (149) videos (116) website (166) whatsapp (132) youtube (109)

Quick Links

  • Home
  • Africa
  • Business
  • Video
  • Metaverse
  • AI
  • Gadgets
  • Earnings
  • Tips
  • Trending
  • Comments
  • Latest
Download Free Editable Resume Templates – Word / Docx – 2022

Download Free Editable Resume Templates – Word / Docx – 2022

July 25, 2022
The Best Free PC Games

The Best Free PC Games

July 29, 2022
[Fixed] “Outlook Running Slow Windows 10” Issue

[Fixed] “Outlook Running Slow Windows 10” Issue

February 12, 2020
How Can We Unlock VBA Project Password Without Hex Editor?

How Can We Unlock VBA Project Password Without Hex Editor?

December 23, 2020
cloud

5 Reliable Cloud Storage Solutions for Small Businesses

3
See the  leaked windows 9 User interface  screen shots

See the leaked windows 9 User interface screen shots

2
Could Vertical Farming Be The Answer To Hunger In Africa?

Could Vertical Farming Be The Answer To Hunger In Africa?

2
How To Confront Data Center Security Threats With Key Management

Here’s A List Of Possible Suspects In Today’s DDoS Attacks – The US Government Is Now Investigating It Too

2
Finance / Managers – Ready Examples to Fill (proposal templates)

Finance / Managers – Ready Examples to Fill (proposal templates)

June 5, 2023
Nvidia Achieves $1 Trillion Market Cap, Joins Elite Group Of Tech Companies

Nvidia Achieves $1 Trillion Market Cap, Joins Elite Group Of Tech Companies

May 30, 2023
Africa Data Centres Plans Expansion To Ghana

Africa Data Centres Plans Expansion To Ghana

May 30, 2023
YouVerify Set Up Shop In Kenya To Lead KYC Automation

YouVerify Set Up Shop In Kenya To Lead KYC Automation

May 30, 2023

Recent News

Finance / Managers – Ready Examples to Fill (proposal templates)

Finance / Managers – Ready Examples to Fill (proposal templates)

June 5, 2023
Nvidia Achieves $1 Trillion Market Cap, Joins Elite Group Of Tech Companies

Nvidia Achieves $1 Trillion Market Cap, Joins Elite Group Of Tech Companies

May 30, 2023
Africa Data Centres Plans Expansion To Ghana

Africa Data Centres Plans Expansion To Ghana

May 30, 2023
YouVerify Set Up Shop In Kenya To Lead KYC Automation

YouVerify Set Up Shop In Kenya To Lead KYC Automation

May 30, 2023
Inside The Hack That Cost Crypto Exchange Patricia $2m

Inside The Hack That Cost Crypto Exchange Patricia $2m

May 30, 2023
How Employers Are Creating Inclusive Remote Work Environments

How Employers Are Creating Inclusive Remote Work Environments

May 29, 2023
  • About TechBooky
  • Submit Article
  • Advertise Here
  • Contact us
  • Privacy Policy
  • Disclaimer
  • Login

© 2021 Design By Tech Booky Elite

Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors
  • Home
  • Africa
  • Business
  • Video
  • Metaverse
  • AI
  • Gadgets
  • Earnings
  • Tips

© 2021 Design By Tech Booky Elite