Apple is earning around $1 billion every year just by making Google the default search engine on iOS devices. That’s according to Morgan Stanley analyst Scott Devitt, who recently published a report titled “The Next Google Is Google.”
In a segment of his report, Devitt estimates how much the search giant is paying the iDevice maker for the advantage of being the default search engine on iOS.
Apple and Google are thought to be engaged in a revenue sharing deal on the matter of Web search on iOS. But as noted by Business Insider, which relayed the Morgan Stanley report:
Devitt thinks Apple wouldn’t do a revenue sharing deal with Google because it’s too messy. He thinks Apple would do a fee per device because it’s easier for accounting and it gives Apple upfront payments. It’s also a hedge against users going to Google.com and searching from there instead of the default search box on iOS.
As a result, Apple is projected to get nearly $1 billion from Google for retaining the latter’s default status for iOS search, ahead of Yahoo! and Bing.
To be sure, $1 billion is no small amount. But once you realize that Apple managed to bring in a net profit of $13.1 billion just last quarter, it suddenly becomes negligible in the grand scheme of things.