Google May Have Paid Billions To Apple To Retain Default Search Status On Safari, Goldman Sachs Says

Goldman Sachs
The ticker symbol and logo for Goldman Sachs is displayed on a screen on the floor at the New York Stock Exchange (NYSE) in New York, U.S., December 18, 2018. (Photo: REUTERS/Brendan McDermid/File Photo)

In an investor memo released to the media this week, Goldman Sachs estimated that Google could have dished out almost $9.5 billion for Apple last year in a bid to keep its default search engine status on Safari.

According to CNBC, Goldman Sachs said the amount would mean that more than 20 percent of Apple's services revenue came from Google's suspected payment. Fees paid by the American tech giant are referred to as traffic acquisition costs (TAC).

Goldman analysts said of the matter, "Not only is TAC large but it is still growing as people search more on mobile devices." They predicted that TAC fees will keep adding into a big chunk of the iPhone maker's services revenue this year. However, growth rates will go slower.

The multinational financial firm called out Apple for depending too much on Google in terms of Services revenue, adding that the Cupertino-based tech giant should also leverage on "Apple Prime." Goldman analysts expecting that the Prime bundle will roll out to the public sometime mid-2019.

This prediction about the supposed "Prime" bundle echoes previous reports from some research firms regarding Apple's future. Previously, multiple research groups predicted that the company may start transitioning towards a service-focused system.

Industry experts believe that if Apple shuts the lid on further smartphone projects in the near future, a services-centered corporation may be very critical to the survival of one of the world's most dominant smartphone providers.

Moreover, some analysts have suggested that iPhone sales will not bounce back until new models are delivered to the public this fall.

Another financial services firm, Morgan Stanley, agreed that an Apple service bundle could pivot the company's path towards reclaiming the spotlight, Apple Insider reported. Along with analyst Katy Huberty, the firm predicted that Apple could redeem its $1 trillion market value through the rumored bundle.

Meanwhile, a new report suggested that the tech company is planning to launch a subscription news service that will allow audiences to read as many contents as they want. Apple will reportedly work with various publishers and media outlets for the project.

According to The Wall Street Journal, the media service is expected to propel the company's Services revenue further. The subscription service is also said to include an agreement between publishers and the company wherein both parties will divide revenue in half. Revenue will reportedly be based on how long readers spend time on each news outlet.

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