Google paid Apple nearly $10 billion to get consumers to its platform
According to Goldman Sachs analysts, Google paid Apple nearly $10 billion in 2018 to get customers towards its search platform and this figure alone accounts to one-fifth of Apple’s revenue from the services segment. Analysts from the bank are trying to point that Apple has a serious reliance on rivals in regards to Services and the bank believes this strategy will not prove profitable in the future.
The fact that Google pays this much money is because it wants to remain the default search engine across all Apple devices. The analysts believe that Apple’s primary revenue source would change when the company will switch towards their own service similar to “Amazon Prime” and if the service launch is successful, Apple would be back on track to becoming a trillion dollar company again.
The bank also predicts that while Apple’s reliance on competitor will continue throughout 2019 but the growth in revenue from rivals will be slower. According to the analysts, regarding the Apple Prime media bundle:
Apple will need to add mid to high single digits growth back to Services revenues through successful launch of the ‘Apple Prime’ bundle including original video that we expect to be rolled out this Spring/Summer.
One begs to question how Apple will distinguish its service from the likes of Amazon and how much exclusive content will be available at the launch time. Do you think Apple’s own media service will help the company recover its lost revenues? Let us know!