A Witness Just Let the Cat Out of the Bag on the Billions Apple Makes from Google

It’s well-known that Google pays Apple billions of dollars a year to remain the default search engine in Safari on the iPhone, iPad, and Mac. However, now it seems we’ve gotten some new insight into exactly how the revenue-sharing arrangement works between the two companies.

Over the years, the amount of money flowing from Google to Apple has been estimated to be well into the ten-figure range. In 2020, analysts estimated it was between $8 and $10 billion per year, but that might have been on the conservative side. A New York Times report last month pegged the 2021 numbers at “around $18 billion.” That’s the lion’s share of the $26.3 billion it paid to be in the default spot across all browsers, including others such as Firefox.

To put that in perspective, Apple’s reported “Services” revenue for the fourth quarter of 2021 was $18.1 billion. That’s the category where Google’s payments are tallied up, and while it also includes Apple’s 15-30% App Store commissions and subscriptions to all its services, if the reported figures are accurate, a quarter of Apple’s 2021 Services revenue came from Google.

The most recent July to September quarter, Q4 2023, saw Services revenue jump to $22.3 billion. While we don’t yet have any dollar figures on what Google is paying Apple in 2023, an expert witness in the ongoing Google antitrust trial just let the cat out of the bag on the exact percentage of the cut of search revenue that Google is handing over to Apple as part of the deal.

As Bloomberg reports, while giving expert economics testimony in Google’s defense, University of Chicago professor Kevin Murphy let it slip that Google is paying Apple 36% of the revenue it earns from searches made through any Safari browser.

Apple and Google have been fighting against revealing the specifics of their search deal, with Google saying in a recent court filing that disclosing this information “would unreasonably undermine Google’s competitive standing in relation to both competitors and other counterparties.” According to Bloomberg, Google’s main litigator, John Schmidtlein, “visibly cringed when Murphy said the number.”

As is often the case, trials such as this give us the opportunity to gain more insight into what’s going on behind the scenes at Apple and other major tech companies. Such cases are mostly held in the public eye, and lawyers must present a convincing case to the judge for any information they want sealed.

For example, last month we heard testimony that DuckDuckGo may have been on the table as an alternative to Google, at least for searches made in Private Browsing mode. DuckDuckGo’s CEO, Gabriel Weinberg, told the court that his company spoke with Apple executives on multiple occasions about this, although nothing ever came of it. Apple’s Senior VP of Machine Learning and AI Strategy, John Giannandrea, presented a counterpoint that, to the best of his knowledge, Apple had never seriously considered this, although some of Weinberg’s discussions may have been held before Giannandrea joined Apple, as he only came over from Google in 2018.

Giannandrea seemingly opposed the notion of switching to DuckDuckGo, but it may have been a moot point anyway. Earlier testimony about how Microsoft had tried to sell Bing to Apple in 2020 revealed that Google had sweetened the pot in 2017 by offering to share its ad revenue with Apple — a move that resulted in Apple switching Siri and Spotlight to Google; during the four years before that, they were powered by Bing.

The terms of the revenue-sharing arrangement have remained one of the most closely guarded secrets between the two companies, but if that 36% figure is accurate, Apple could be pulling in much more than anyone thought. In its most recent earnings results, Google reported $44 billion in advertising revenue from “Google Search & other” in a single quarter. However, it’s unlikely Apple is getting 36% of that total amount since that would work out to $15.8 billion, or about 70% of Apple’s total Services revenue.