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Google is paying Apple billions each year - but perhaps not for much longer

(Image credit: Shutterstock / Alexey Boldin)

Google is still paying Apple billions for the privilege of remaining the default search engine on its web browser Safari, according to a new report from the UK Competitions and Markets Authority (CMA).

In the UK alone, the search giant is said to have paid Apple a “substantial majority” of the £1.2 billion (circa $1.5 billion) that went towards reinforcing Google’s dominance in the search market last year.

However, the CMA believes deals such as this, that allow Google to secure what is referred to as ‘default position’ on web browsers and other platforms, could amount to a breach of competition law.

According to the report, the arrangement between Google and Apple poses “a significant barrier to entry and expansion” for rivals in the search market.

Browser wars

Between them, according to statcounter.com, Apple and Google are responsible for more than 80% of the worldwide browser market share, with Google Chrome holding 65.47% and Safari 16.97%.

The UK watchdog, then, is wary about allowing Google to cement its existing dominance in the search engine market any further with its ongoing arrangement with Apple.

“Google has negotiated agreements with Apple and many of the largest mobile phone manufacturers under which it pays a share of search advertising revenues to these partners in return for Google Search occupying the default search positions on the device,” reads the report.

“Given the impact of preinstallations and defaults on mobile devices and Apple’s significant market share, it is our view that Apple’s existing arrangements with Google create a significant barrier to entry and expansion for rivals, affecting competition between search engines on mobile.”

Rival search offerings include Microsoft-owned Bing, Verizon-owned Yahoo and DuckDuckGo, each of which also pays Apple a fee to be offered up as a search option to users.

According to analyst estimates, Apple takes in circa $9 billion per year in licensing revenue, roughly 80% of which stems from its relationship with Google. 

To rectify the market imbalance, the CMA has suggested capping the extent to which Apple can profit from such arrangements, or giving users a clear choice of default search engines when they first boot up Safari.

Apple, meanwhile, told the watchdog that measures of this kind would prove “very costly”.

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Via Reuters