October 31, 2020

This is how Google is making Apple richer

Google will be paying Apple a hefty amount of 3 billion dollars to remain the default search engine for Apple’s iPhones and iPads. The licensing fee has increased from 1 billion dollars in just 3 years which contribute to at least 5% of the total profit per year for Apple’s services business. Since Apple’s services business has been growing, it expects this segment alone to be as large as a Fortune 500 company.
Bernstein analyst A.M. Sacconaghi Jr. said that there are both pros and cons of this deal, indicating that Google might back out from paying this fee if it feels confident enough about its search engine that Apple will have no other option than to include it as its default search engine. But on the other hand, Apple iOS devices contributes 50% of Google’s mobile search revenue making Google think twice about ending this deal. The analyst has also mentioned that Google’s fee is all profits for Apple, adding almost 25% of total operating profits in the last two years.
Meanwhile, Apple is being backed by other tech giants like Facebook, Microsoft, Google and Amazon in the sprawling battle with Qualcomm, where the latter wants to ban Apple from importing foreign assembled iPhones that use Intel-chips.
Ed Black, the CEO of the Computer & Communications Industry Association group which Apple is not a part of said, that if USITC were to permit this exclusion, Qualcomm could use its monopoly power for further leverage against Apple and allow them to drive up prices on consumer devices.
Qualcomm supplies modem-chips to Apple which allows iPhones and iPads to connect to cellular data network and Apple has objected to signing the patent license agreements before buying chips.