Google is said to be paying Apple $1 billion a year in order to be the default search engine on iPhones, iPads and the iPod touch.
Morgan Stanley analyst, Scott Devitt, revealed the figure in a recent note to investors. He believes that Google’s search business has the potential to progress further through expanding markets and subsidiaries such as YouTube, which he sees generating as much as $20 billion by 2020.
Devitt estimated that the $1 billion Google pays to Apple to be the default search engine in iOS is expected to increase over the next few years. It was previously believed that both companies were involved in a revenue sharing deal, but the analyst dismissed that notion, as it would be too complicated for the two technology giants.
Instead, Devitt believes that Apple has agreed upon a fee per device agreement in order to receive upfront payments. The partnership has apparently resulted in Google accounting for 95 percent of the mobile search market.