Google reportedly paid Apple $1 billion in 2014 to keep the default search bar on iPhones
An examination of the court transcripts by Bloomberg indicated that Google paid a hefty Apple $1 billion in 2014 to retain its position as the default search bar provider on iOS. The clarity on the figure was received as part of Oracle’s long-running copyright lawsuit against Google.
During a hearing last week in federal court, an attorney for Oracle said that the payout was part of a revenue-sharing agreement the two companies have that gives Apple a percentage of the revenue Google generates through Apple devices.
According to a witness questioned during the court proceedings, “at one point in time” the revenue share between Google and Apple was 34%. It was not immediately clear if the percentage reflects the share Google keeps or pays to Apple.
Google lawyers reportedly attempted to have the witness’ statement regarding the 34 percent share struck off the court transcript. This request was denied by the judge presiding over the trial.
Google filed another request to have the transcript sealed and redacted, which contains information said to be highly confidential. Apple too has reportedly requested the same in a separate filing. In Google’s filing the company reportedly stated:
“The specific financial terms of Google’s agreement with Apple are highly sensitive to both Google and Apple. Both Apple and Google have always treated this information as extremely confidential.”
Both the company’s request was presumably granted later, as Bloomberg says the transcript is no longer available.
Besides throwing light on a very sensitive deal, the disclosure is interesting because it shows two things. The value that Google puts on its rivals’ platforms to increase its search business and, second, that Apple draws revenue from Google’s advertising-based business model despite Apple CEO Tim Cook having made numerous public statements criticizing companies that make money from using personal data.
Speaking at EPIC’s Champions of Freedom event in Washington last summer, Cook said:
I’m speaking to you from Silicon Valley, where some of the most prominent and successful companies have built their businesses by lulling their customers into complacency about their personal information. They’re gobbling up everything they can learn about you and trying to monetize it. We think that’s wrong. And it’s not the kind of company that Apple wants to be.
The contract between Apple and Google’s search was reportedly set to end in 2015, raising speculation that Apple could end the agreement in favor of working with Yahoo or Microsoft. Yahoo and Microsoft were both interested in inking a deal with Apple to dethrone Google as the default search engine on iOS devices, but it looks like Google and Apple may have established a renewed agreement, as there are no signs of shifting to another search engine as of now.
In a May 2015 interview, Google’s chief business officer Omid Kordestani said Google wanted to continue its partnership with Apple. “We’d love to continue our partnership with them and doing our best to work with them, and that’s all I can say for now,” he said.
Another factoid thrown up by the case included a claim by Oracle that Android has generated $31 billion in annual revenue to date, of which $22 billion is profit. Oracle claims that the search engine company used its Java software without paying for it to develop Android.
While Oracle is seeking royalties from Google over its use of some of the Java language, Google argues it should be able to use Java without paying a fee.