Could Apple Cost Google $8 Billion?

 

A recent estimate by Goldman Sachs suggests that about 11.8 Billion dollars comes from advertising revenue on smartphones and mobile devices. Of that, apparently Apple’s iOS devices generate almost 75 percent. That’s a lot of ads going to mobile devices no matter how you look at it, but what would happen if Apple suddenly decided to steer their users to another search engine? Such an upheaval may be brewing as you read this.

Apple and Google have had a rocky relationship for some time, and speculation is that Apple may be looking at other partners. Microsoft and Apple are much less direct competitors these days, particularly in the mobile space, and Bing is often touted as the new engine of choice. Microsoft has been busy inserting themselves into the mobile space with both iOS and Android versions of many of their major applications. Apple may see that, in addition to the competition with Google in the mobile space, as a reason not to renew the long-standing agreement that makes Google the default search engine on mobile Safari, the browser most iOS users use.

Apple also takes issue with Google’s privacy policies (amongst others). Apple’s CEO Tim Cook was  recently honored by the Electronic Privacy Information Center for his role in the recent public discussion about privacy versus security. Google and Facebook were mentioned specifically as invading privacy for the purpose of advertising revenue, which is a part of Google’s fundamental business model.

Apple is also rumored to be looking at expanding its cloud offerings with acquisition of companies like Dropbox of Box being the most often mentioned. Apple is aggressively courting the corporate market and sees additional cloud services as part of the solution that it needs to offer. With more and more people wanting to use their personal devices at work in the BYOD (Bring Your Own Device) model, having devices that can function in both the personal and workplace arenas may be more critical for Apple.

Google is estimated to have paid Apple $1 Billion to remain the default search engine in a deal that is rumored to expire in 2015. If the deal is not renewed, Google could potentially lose that large share of the mobile market search revenue. 75% of 11.8 billion dollars is 8.85 billion, in lost revenue.