According to a report from Morgan Stanley reported on in TechCrunch, Google could pay more than $1 billion in 2014 to remain the default search engine on Apple‘s iOS. In 2009, Google paid only $82 million for the privilege.
According to the report titled “The Next Google Is Google,” the total traffic acquisition cost is somewhat proportional to the number of iOS unit sales, with a traffic acquisition cost rate slowly going up from $3.2 per unit last year to an estimated $3.3 per unit this year and $3.5 per unit next year, says the TechCrunch piece. Effectively, the total traffic acquisition cost is going to increase in the coming years if iOS sales keep growing.
Over the years, Apple has gotten more revenue from Google as Microsoft has been pushing very hard and bidding to make Bing the default search engine. For example, Bing is now the default provider on Nokia and BlackBerry devices.
According to the article, Google pays more money to Apple than it directly generates from iOS users. But user data is worth a lot. With only $2.9 billion in profit last quarter, it’s a non-negligible way to affect Google’s bottom line.