Google paid a huge sum of amount to Apple, making it the default search engine on the iPhone. According to Toni Sacconaghi of Bernstein, Apple earns about $8 billion in annual revenue, so Google can become the default search engine on iOS devices such as the iPhone.
This has brought considerable advertising revenue to Google, with revenue from iOS reaching as much as $25 billion annually, and the money Apple gets from this search company reaches its bottom line. So why should both companies make changes?
Analysts said that Apple needs to buy the search engine, lest it is too late
Sacconaghi appeared on CNBC today. He said that the reason why Google paid so much money to Apple was to worry that if Google did not pay the amount requested by Apple, Microsoft would pay. This will make Bing the new default search engine on the iPhone.
Analysts say that Apple also has some risks here. He said that if Apple were to replace Google with Bing, Microsoft could one day tell Apple that since the search was not a priority, it was no longer interested in setting Bing as the default search option on the iPhone.
In this way, Google can wait, willing to restore Google to the default iOS search engine, but only need to pay 500 million US dollars.
The analyst said that Apple can buy cheap “insurance policies” for this situation by buying its search engine. He correctly pointed out that Apple cannot profit from search by itself and should buy DuckDuckGo.
As of last month, it had a 1.35% share in the US search market (88.16% for Google and 6.51% for Bing). Owning Duck Duck Go may cause Google to worry about losing $25 billion in revenue from iOS search.
Sacconaghi said that Apple can make such acquisitions for less than $1 billion. This will be less than a week of Apple’s cash flow. He called it a “very tricky three-legged stool.” He pointed out that it earned more than 10% of Apple’s operating income from Google, and reiterated that having a search engine can provide Apple with some insurance.
As of last month, DuckDuckGo has 93 employees, which is larger than a typical Apple acquisition. As of May 2020, 61.75 million searches were performed daily. Despite storing search terms, they cannot establish contact with any individual user. Gabriel Weinberg, the creator of the search engine, said: “By default, DuckDuckGo does not collect or share personal information.
The company’s net worth is estimated at $901 million, but the company is not publicly listed. This means that Apple will have to sit down with the company and calculate a specific price like most other companies. Its acquisition.
One thing Apple needs to consider is that Sacconaghi doesn’t have the possibility that 50 state attorneys general or the Department of Justice (DOJ) may decide to spin off Google’s advertising business.
This will affect Google search, in the worst case, the company may be crushed and scattered in the wind. If Search eventually becomes part of a smaller independent company, it may not be possible to pay Apple $8 billion.
In addition to DuckDuckGo, Yahoo Search may pry the appropriate amount from Verizon. Yahoo Search had a 3.62% market share in the US last month; however, for Apple, the purchase of DuckDuckGo will be more expensive, and the latter’s policy privacy will be fully consistent with Apple’s.