Alphabet's (GOOGL) Google is reportedly paying Apple Inc (AAPL) $3 billion this year to remain the default search engine on Apple's iPhones and iPads, according to a Bernstein note.
The price tag for relevance will probably increase this year, Bernstein wrote, up to $3 billion from $1 billion just three years ago. Google's big licensing fee makes up a decent amount of Apple's growing services business. Bernstein analyst A.M. Sacconaghi said Google payments could account for 5% of Apple's total operating profits this year.
CNBC first reported the news.
But Google could back away from the pricey deal if it feels its service is popular enough to stay relevant even if Apple doesn't make it the iOS default search engine. Since Apple devices are to thank for about half of Google's mobile search revenues, though, Google probably isn't going anywhere, Sacconaghi said.
Alphabet stock traded up 1% to $939.48 at midday Monday. Apple stock traded up 1.1% to $159.19.
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