In a note to clients — as reported by CNBC — Bernstein analyst A.M. Sacconaghi Jr. says Google will pay Apple $3 billion this year to remain the default search engine on iPhones and iPads. Google paid Apple $1B billion for the privilege in 2014.
The Google licensing payments are mostly profit for Apple. Bernstein estimates the payments could account for up to 5% of Apple’s operating profits in 2017.
The analyst adds that Apple’s products account for about half of Google’s mobile search revenues. However, he adds, that in the future, Google might choose to stop the payments if it was fairly certain that Apple would continue to include its search engine on iOS devices based purely on customer demand.