Google Pays $700M to Apple for Prominent Mobile Search Placement

From DailyTech: As computing continues to shift towards a more mobile profile, Google -- a company driven by search-related advertising profits -- has moved aggressively to be the king of mobile. By offering its Android operating system "free" to partners Google has established a dominant position in unit sales. And by extending an olive branch to Apple -- the second place player in the market -- Google is ensuring that if a customer uses the default search on their smartphone, they'll probably use Google's mobile landing page.

Google pays an estimated $3.20 USD per iOS device sold to be the default search provider, according to Mr. Devitt's math. That deal grossly eclipses Google's lucrative deal with the Mozilla Foundation, which Mr. Devitt estimates paid $200M USD.

On the desktop front, many users manually navigate to Google. Additionally, Google's Chrome browser is currently in third place, while Firefox is narrowly ahead in second place in most usage statistics. Both browsers have Google as the default search engine. Overall the two browsers account for about a third of internet traffic according to Net Applications, while Microsoft Corp.'s (MSFT) Internet Explorer (IE) hangs on to half of traffic. The default search page in IE is Bing (or the Bing-powered MSN), Microsoft's own in-house solution.

Mr. Devitt estimates that by 2019, IE will have bled more market share to Chrome and Mozilla, and Google will have greater control of the market. However, he also believes that control will cost Google $500M USD in traffic acquisition costs (TAC) to Mozilla.

He also estimates by 2019 Google will be paying Apple $2.3B USD in TAC for iOS, as he expects unit sales of iPads, iPhones, and iPod Touches to soar to half a billion devices a year by 2019.

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