Google pays Apple a portion of Chrome search revenue- 9to5Mac

Google pays Apple a portion of Chrome search revenue- 9to5Mac

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A new report from The Register today claims that Google is “paying Apple a portion of search revenue” that comes from Google Chrome on iOS. “This perhaps explains why Apple has not launched a rival search engine or invested in the development of its Safari browser to the point that it could become a credible challenger to Chrome,” the report speculates.

Update: This arrangement was also reported by Bloomberg back in 2020:

“Apple also gets a slice of revenue from searches made through some of Google’s own apps, such as Chrome, installed on iPhones, iPads, and Macs, according to a person familiar with the arrangement who asked not to be named discussing private business agreements”

One of the largest components of Apple’s Services revenue is the multibillion-dollar payment it receives from Google every year in exchange for it being the default search engine on iPhone, iPad, and Mac. While this deal by itself has received regulatory scrutiny, today’s report from The Register claims that the financial relationship between Google and Apple includes another key component.

The report cites a “source familiar with the matter” and says that Google is paying Apple a “portion of search revenue generated by people using Google Chrome on iOS.” It’s not explicitly clear how much Google is paying Apple as part of this arrangement.

The Register says that this revenue-sharing arrangement is part of what’s being investigated by the Competition and Markets Authority in the UK. As part of its evidence, the report points to some curious redactions in the 365-page report that was published by the CMA last year (emphasis ours):

“Google pays Apple a share of the search revenue it earns from browser traffic on iOS in the following contexts: in return for being the default search provider on Safari, Google pays Apple a share of revenue derived from Safari search traffic; and pursuant to various commercial arrangements, Google pays Apple a share of revenue derived from (X) search traffic.

“Under these agreements, Apple receives a significant share of revenue from Google Search traffic on Safari and (X) on iOS devices.

“Given this revenue share, when (X) or Safari is successful in competing for an iOS user, rather than winning a full share of the search traffic revenue it only wins a partial share (ie the revenue to which it was not previously entitled). These revenue sharing arrangements therefore dampen incentives for competition between browsers on iOS.”

The report also points to a December 2021 antitrust lawsuit filed in California and updated in March 2022. The report alleges that “Google paid billions of dollars to Apple and agreed to share its profits with Apple to eliminate the threat and fear of Apple as a competitor.”

When asked about these redactions, the CMA reportedly told The Register that it “cannot comment on or disclose any confidential information.” As for Google and Apple, the report says “neither corporation would talk” when asked to “confirm or deny” the report.

If true, this would be a major revelation regarding the relationship between Apple and Google. It’s something that would almost undoubtedly face immediate antitrust pressure, even beyond the CMA investigation in the UK. If the arrangement in which Google pays Apple to be the default search engine is controversial, this revenue-sharing agreement would be even more controversial.

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