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Google paid Apple $1bn to be default iOS search engine

Apple and Google are rivals. So why is Google the default search engine for mobile Safari, which is the pre-installed web browser on iPads and iPhones?

The answer, court documents revealed on Thursday, is simple: money talks. And $1bn, the amount Google paid Apple in 2014 for the privilege of default access to the hundreds of millions of iPhone users, talks very loudly.

The information came to light as part of Google’s lawsuit with Silicon Valley giant Oracle, which accuses the search firm of infringing on Oracle’s patents for programming language Java in its Android operating system.

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On top of the $1bn payment, which had been reported as a rumour by TechCrunch in 2013 but not confirmed until now, Oracle’s lawyers also revealed that Apple and Google shared a portion of the revenue Google received from showing adverts to iOS users. According to Oracle, “at one point in time” that share was 34% – although it wasn’t clear who got the larger end of that deal.

The payments kept Google as the default search engine for mobile Safari, allowing it to continue to cash in on iOS. And being the default is important: when Apple switched from Google Maps to its own in-house team for the default map app on iPhones in 2012, the new app was criticised for its error-ridden maps.

Three years on, the default app was used three times as much as Google’s own app, according to Apple. That’s millions of users who Google can’t get data from or show adverts to.

Elsewhere, in iOS, Apple is already detaching itself from Google search: the default search engine on Siri is Microsoft’s Bing, and that cannot be changed by the user.

Other figures released in court help reveal quite why Google was so eager to pay Apple huge sums of money for access to its users. Google’s Android operating system, the most popular in the world, has generated revenue of $31bn and profit of $22bn in its lifetime.

For comparison, Apple generated $32.2bn revenue from the iPhone in the fourth quarter of 2015 alone – a figure that doesn’t include its income from the App Store and iAd platforms, each the most direct comparators for Google’s Android revenue.

Google’s makes money from Android in two ways: it takes a proportion of the sales of apps and media on the Google Play Store, and it shows display advertising to Android users.

Apart from its own Nexus and Pixel-branded devices, it does not receive any revenue from the sale of Android phones – in stark contrast to Apple. That means that iOS users are almost as valuable to Google as Android users, since the firm can still profit by showing them adverts, but doesn’t have to expend the energy of developing a whole operating system for them.

Google was unhappy with the publication of the revenue figures, however, telling Oracle and the court that they should have never been made public. The company told a federal judge that Oracle’s lawyer improperly disclosed “extremely sensitive information”, and asked for the court records to be redacted and sealed.

“Google does not publicly allocate revenues or profits to Android separate and apart from Google’s general business,” the company said in the court filing. “That non-public financial data is highly sensitive, and public disclosure could have significant negative effects on Google’s business.”

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