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Analyst: Google pays Apple $1bn a year to be iOS search engine default

Morgan Stanley analyst has said that Apple and Google are likely in a fee per device search agreement

By Ashleigh Allsopp, Macworld.co.uk
February 12, 2013 07:15 AM ET

Macworld.co.uk - Apple is paid an estimated $1 billion a year by Google for positioning its search engine as the default option on iOS devices, an analyst has said.

[SEARCH SMACKDOWN: Bing vs. Yahoo vs. Google]

In a report titled "The Next Google Is Google," Morgan Stanley analyst Scott Devitt wrote that he believes Apple and Google have agreed to a "fee per device" search agreement rather than a revenue sharing deal, in order to simplify accounting and allow Apple to collect upfront payments.

Apple made $13 billion in profit last quarter alone, so $1 billion per year from Google isn't huge, but it does offer Apple a nice pure profit stream that requires little effort for the company, reports Business Insider.

The deal also means that Google remains the prime search engine for iOS devices, which the company is believed to have earned 80 per cent of its ad revenue from between 2008 and 2011.

Devitt estimates that Google also pays $300 million a year to Mozilla to ensure that it is the default search engine for Firefox.

Last year, Apple booted the YouTube app out of its iOS defaults with the launch of iOS 6, and also replaced Google Maps with its own mapping service, which has been widely criticised.

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