According to CNBC, investment firm Bernstein indicates that Google will pay Apple, Inc. (NASDAQ: AAPL) $3 billion this year to continue to be the default search engine on iOS devices. Licensing payments are a huge part of Apple’s services revenue.
Devices such as iPhones and iPads currently have the google as the default search engine. Apple believes that its services business is a big enough segment of the company that will eventually be recognized as a Fortune 500 company alone!
"Court documents indicate that Google paid Apple $1B in 2014, and we estimate that total Google payments to Apple in FY 17 may approach $3B," Bernstein analyst A.M. Sacconaghi Jr. said. "Given that Google payments are nearly all profit for Apple, Google alone may account for 5% of Apple's total operating profits this year, and may account for 25% of total company OP growth over the last two years."
Bernstein has set Apple to an outperform rating with a whopping price target of $175.