Google paid Apple $1bn to keep its search bar on iPhone

Friday 22 January 2016 17.54
Google, a unit of Alphabet, gives Apple a percentage of the revenue it generates through the iPhone but details of the arrangement have never been made public
Google, a unit of Alphabet, gives Apple a percentage of the revenue it generates through the iPhone but details of the arrangement have never been made public

Google paid Apple $1bn (€930m) in 2014 to keep its search bar on the iPhone, Bloomberg has reported, citing a transcript of court proceedings related to a copyright lawsuit filed by Oracle Corp against the search giant.

Google, a unit of Alphabet, gives Apple a percentage of the revenue it generates through the iPhone but details of the arrangement have never been made public.

Bloomberg, citing a transcript of the Oracle-Google pretrial last week, reported that a Google witness had revealed that the revenue share was 34% at one point.

However, it was not clear whether that percentage represented the amount kept by Google or paid to Apple, the report said.

The court transcript that was the source of the Bloomberg report is no longer available online.

Google said in a court filing on Wednesday that the Android disclosures should not have been made public, and asked the court to place them under seal.

In its lawsuit, Oracle is accusing Google of using its Java software without paying for it to develop Android.

The Android mobile operating system began with the release of the Android alpha in November 2007.

The first commercial version, Android 1.0, was released in September 2008.

An Oracle lawyer had told a court hearing that Android had generated revenue of about $31bn and profit of $22bn since its release.

"Assuming Android has only generated material revenue since 2010, then these figures would constitute about 10% of Google's revenue and 15% of its gross profit since that time," Atlantic Equities analyst James Cordwell told Reuters.

"This makes sense given mobile is probably about 40% of Google’s revenue today, having ramped up from close to zero over the last 5-6 years, with this split between iOS and Android," Mr Cordwell added.

Google, which morphed into Alphabet in August as part of a restructuring, does not break out revenue from its mobile business, a number investors have long coveted.

Under the Alphabet structure, search, advertising, maps, YouTube and Android are part of Google, while the company's secretive research arm, Google X and driverless car project come under Alphabet.

The company will report quarterly results under the new structure for the first time on 1 February.

Google and Apple did not respond to requests for comment today.