Google's $1 Billion Apple Payoff To Keep Search On iPhone

A revenue-sharing advertising agreement between Apple and Google shows just how far companies will go to get close to consumers online.

Apple received $1 billion from Google in 2014, gaining a percentage of the revenue generated by search advertising serving up on iPhones.

Court documents obtained by Bloomberg reveal how Apple benefited from Google's ad business after an attorney for Oracle at a Jan. 4, hearing spilled the beans during a Jan 14 copyright hearing in federal court. The suit accuses Google of using Oracle's Java software to develop the Android operating system without paying for it.

Annette Hurst, the Oracle attorney, disclosed the details, per Bloomberg, estimating that at one point the revenue share was 34%, although the transcript didn't clarify whether that percentage equaled the amount of revenue kept by Google or paid to Apple.

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Apple's share of U.S. iPhone users rose from 42.3% in 2014 to about 43.3% in 2015, according to eMarketer. In 2013, that number was around 40%. Android, by comparison, saw its share of U.S. smartphone users rise to 51.7% in 2015 -- up from 51.3% in 2014, and 50.5% in 2013, per eMarketer.

In the U.K. eMarketer estimates Apple accounted for about 32.2% share of smartphone users in 2015, up from 30.8% in 2014. Android accounted for about 56.2% and 55.9%, respectively, of smartphone users in the U.K., per eMarketer.

The irony is that despite Apple CEO Tim Cook's stance on privacy and protecting customer data, the company partnered to use Google's search services. In June 2015, Cook told a group at the EPIC’s Champions of Freedom event in Washington that consumers shouldn't have to make a tradeoff between privacy and data. "We don’t think they’re worth having your email, your search history and now even your family photos data mined and sold off for god knows what advertising purpose," he told the group.

The search industry is full of revenue-sharing deals. Usually, the industry is not privy to the percentage or dollar amount earned. Such the deal between Yahoo and Google. Yahoo reported in its third-quarter 2015 earnings result that it reached a deal with Google to use its search services to complement its deal with Microsoft.

The deal between Microsoft and Yahoo, originally signed in December 2009, came up for renewal in April 2015. Yahoo CEO Marissa Mayer, at the time, explained that Yahoo would deliver 49% of its desktop search quarters, but Microsoft would power the listings and ads on the remaining percentage.

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