A new memo by UBS analysts says Google could lose billions in revenue if Apple decides against renewing their deal making Google the default search engine in iOS.
An existing search deal is due to expire this year, and Google investors are reportedly worried that Apple will reject a new one. In a research note to investors obtained by AppleInsider, UBS estimates that Google will generate $7.8 billion in revenue from its iOS deal this year, or about 10 percent of gross revenue.
While losing that much revenue would have a great impact on Google’s bottom line, UBS does note that there are users who would switch back to Google as their default iOS search provider.
If 50% of users switched back to Google, UBS estimates that would cut the impact on gross revenue by half, reducing net revenue by only 3%, partially because Google would no longer be paying Apple for the privilege of being the default iOS search provider.
“We believe this is a much smaller headwind that many investors expect,” UBS writes.
Google and Apple have what can at best be termed as a “frenemy” relationship. While Google has been the default iOS search engine, and has developed a number of apps for use on the iOS platform, Google’s Android platform has long been a competitor to iOS. Apple has also sued a number of Android device makers.
While Apple will likely go with Yahoo or Bing as a default if it decides against renewing the search deal with Google, it could also take a stand for privacy and security, going with Duck Duck Go, the upstart non-tracking search engine added to the iOS search options just last year.
