Google will be paying rival tech giant Apple $15 billion to remain as the default search engine for its devices. Apple’s devices come preinstalled with the Safari browser, where Google is the default search engine. It is willing to pay $15 billion to remain that way, according to analysts at Bernstein. While it is known that Google makes substantial payments to Apple each year to this end, this year’s reported payments mark a drastic increase over previous ones.

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The company had paid $10 billion to Apple in 2020 for keeping Google as the default search engine, but the payment for 2021 increased by 50 percent to $15 billion. Bernstein estimates that payments will increase to somewhere between $18 billion and $20 billion in 2022. Google’s aim in making these large bids are to ensure that Microsoft does not get an edge in the important iOS devices segment with its Bing search engine. Rival search engines like DuckDuckGo are also quickly becoming contenders, with platforms that protect users’ privacy and data security, something that Google has been accused of violating on multiple occasions.

However, Google’s deal with Apple may not be long for the world, as national leaders and watchdogs are becoming increasingly strict regarding anti-competitive practices used by large tech companies like Apple and Google. Both companies were dragged to court by several developers, including Epic Games the makers of the hit videogame Fortnite, over their anti-competitive practices in their app stores for mobile devices. Apple has already struck a deal with smaller developers in a $100 million settlement as it still dukes it out with Epic Games and larger developers in the ongoing proceedings.

According to Bernstein analysts, regulatory action remains a major concern for the deal between the two companies. The payments from Google also make up 4-5 percent of Apple’s gross profits and any regulatory action could have adverse effects for both companies.

“We see two potential risks to GOOG’s payments to AAPL: (1) regulatory risk, which we believe is real, but likely years away; we see a potential 4-5% impact to Apple’s gross profits from an adverse ruling; & (2) that Google chooses to stop paying Apple to be the default search engine altogether, or looks to renegotiate terms and pay less. We have noted in prior research that GOOG is likely paying to ensure Microsoft doesn’t outbid it. That said, with payments likely to approach $18 – $20B in FY 22, it not implausible that Google could revisit its strategy,” reported Bernstein.

UK Competition and Markets Authority has already stated that such deals between the two companies can create and expound "a significant barrier to entry and expansion" for other companies that are making their own search engines.

Perhaps in order to buffer the impact of a potential collapse of the deal due to regulatory action, Apple has reportedly been working behind the scenes to develop its own search engine. Apple, which often markets itself on its privacy features, has long been criticised for its deals with Google, a company that is notorious for the amounts of data it collects through the full host of its services. Apple has frequently butted heads with Facebook, another large tech company that relies on data collection to earn its revenue.

(Edited by : Shoma Bhattacharjee)