Experts estimate that Google is responsible for processing some two trillion searches on an annual basis. Alphabet, the parent company of Google, also provides a number of other applications for free, including Gmail, Translate, Drive, and Sheets, for example. More people rely on Google than they realize – the company’s work is quite literally everywhere!
Recent news indicates that about 20 percent of the annual revenue of Apple Services comes directly from Google. In dollar value, this comes out to just a hair short of $10 billion in 2018 alone!
Market experts have suggested that Apple should create a platform to compete against Amazon Prime. Whatever media service bundle Apple comes up with, it’ll surely give Amazon Prime a run for its money.
Analysts from Goldman Sachs, who support the ideology in the paragraph above, also believe that Apple should not continue to lean on Google for help. Relying on one’s worst enemy as a major source of income isn’t a good idea by any stretch of the imagination.
Every year, believe it or not, Google forks over tons of money to pay smartphone manufacturers to keep their default search engine as Google. Further, this sum is somewhere between $9 and $10 billion in annual expenses, says Goldman Sachs’ very own Rod Hall, an industry analyst. For those who are interested in terminology, the official name of these expenses are traffic acquisition costs.
Next year, according to an estimate put out by Goldman Sachs, Google could end up forking over a massive $12.2 billion in traffic acquisition costs.
Another Goldman Sachs analyst stated that they believe the so-called “Apple Prime” bundle of digital streaming services will ultimately be dropped no later than the end of this summer.
A whopping one-third of Apple’s profit this year came from Google’s payoff of traffic acquisition costs. It’s said that Google’s traffic acquisition costs will decrease in proportion to the total revenues garnered by Apple in coming years.
Although it’s clear that Apple will, in fact, come out with the streaming media bundle at some point in 2019, nobody knows what exactly the bundle will contain.
Calculations indicate that traffic acquisition costs and Apple’s take of money from downloading apps on its app store together make up 51 percent of Apple’s Services revenues this year.
70 percent of Services’ gross profits came from the combo of app store fees and traffic acquisition costs.