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February 12, 2013

Google to Pay Out Big to Remain King of Search

By Steve Anderson, Contributing TMCnet Writer

The rivalry between Apple (News - Alert) and Google has been every bit as pronounced and vociferous as Apple's rivalry with Microsoft was, and some would say, still is. But both companies are also finding themselves not only rivals, but also strange bedfellows, as a recent report from Morgan Stanley indicates that Google is prepared to pay big money to Apple to hold its place as iOS' default search mechanism.

By way of background, in 2009, Google shelled out fully $82 million to Apple to be the default search engine, which was attributed by Morgan Stanley analyst Scott Devitt as being a function of the iOS line's per-device payment model. But in 2013, Google is expected to pay out fully $877 million, and by 2014, that number will clear $1 billion. To put those numbers in perspective, Google is essentially paying Apple 75 percent of its take from searches on iOS devices from advertising and data collection.

That won't be the only place Google is dropping big cash to remain top search dog: the report also indicated that Google would pay $300 million to the Mozilla (News - Alert) Foundation to stay on top on Firefox and the upcoming Firefox mobile app. Next year, Google is set to pay $400 million for the same privilege.

Image via Shutterstock

So what's driving Google to pay most of its take to remain top in searching? Competition may be the biggest driver; Microsoft (News - Alert) has reportedly been hard at work to get its Bing search engine rated as the default on iOS devices, since it's already the top search on Nokia and BlackBerry (News - Alert) devices. Additionally, Apple has been seen previously as somewhat hesitant about using Google systems on iOS devices, likely owing to the competition between iOS devices and those devices powered by Google's Android operating system. This has been seen in Apple's dropping of YouTube (News - Alert) and Google Maps as defaults with the emergence of iOS 6, but Google has since replaced them with standalone apps.

It's enough to make anyone wonder how long Google will settle for the comparative pittance it's realizing from iOS searches. While any income is good income in a slow economy, sometimes there's a point where there's too much hassle for too little reward. Also, since Google has been spotted in several new and unusual industries, like cars that drive themselves and wearable technology, it may be a sign that Google may be growing past the search industry and into several other industries. But still, that search revenue is likely to prove necessary in funding research and development projects, so Google is clearly still out to maintain that income.

Google's exact motivations are a mystery to everyone but Google, but it's clear that Google is actively involved in keeping itself at the top of its game in several industries. It certainly won't be dull to see where Google ends up from here.

Edited by Brooke Neuman
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