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October 10, 2017 04:00 pm

Google Paid $7.2 Billion Last Year To Partners, Including Apple, To Prominently Showcase Its Search Engine and Apps on Smartphones

A reader shares a Bloomberg report: There's a $19 billion black box inside Google. That's the yearly amount Google pays to companies that help generate its advertising sales, from the websites lined with Google-served ads to Apple and others that plant Google's search box or apps in prominent spots. Investors are obsessed with this money, called traffic acquisition costs, and they're particularly worried about the growing slice of those payments going to Apple and Google's Android allies. That chunk of fees now amounts to 11 percent of revenue for Google's internet properties. The figure was 7 percent in 2012. These Google traffic fees are the result of contractual arrangements parent company Alphabet makes to ensure its dominance. The company pays Apple to make Google the built-in option for web searches on Apple's Safari browsers for Mac computers, iPhones and other places. Google also pays companies that make Android smartphones and the phone companies that sell those phones to make sure its search box is front and center and to ensure its apps such as YouTube and Chrome are included in smartphones. In the last year, Google has paid these partners $7.2 billion, more than three times the comparable cost in 2012.

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