Google reveals higher traffic acquisition payouts, supporting claims of costlier Apple search deal
While Google parent company Alphabet beat forecasts in this week's third-quarter results, pulling in $27.77 billion in revenue, the company simultaneously warned of higher traffic acquisition costs — likely supporting claims that it's paying Apple more to be the default option in Safari search.
Traffic acquisition spending rose from $2.62 billion a year ago to $3.1 billion, according to Business Insider. As a percentage of ad revenue, that's up from 21 percent to 23 percent.
CFO Ruth Porat didn't explicitly blame the change on Apple, but did link it to a shift to mobile and "changing partner agreements."
Google's placement as the default Web search option on iPhones and iPads generates a high amount of ad revenue the company is likely unwilling to sacrifice. If so, that might allow Apple to raise costs as high as it feels Google can afford. In August, Bernstein analyst A.M. Sacconaghi Jr. estimated that Google may now be paying Apple close to $3 billion per year. For 2014 that sum was just $1 billion.
Conversely, while Safari users do have three other search options — Bing, Yahoo, and DuckDuckGo — Google is by far the most popular search engine in most countries. Recently, Apple made Google the default for Web searches via Siri, iOS, and macOS Spotlight, shifting away from Bing.