AMN

Never say Apple Inc (NASDAQ:AAPL) is losing money. This is a notional, opportunity loss.

• Apple shares are experiencing downward pressure. What’s driving AAPL stock lower?

Google’s Loss Also Apple’s Loss?

Apple doesn’t say how much Google parent Alphabet Inc (NASDAQ:GOOG)(NASDAQ:GOOGL) pays it to be the default search engine on iPhones. But Alphabet’s latest earnings just offered a clue, and it isn’t the one Apple investors would want.

Google’s search revenue grew 12% in the third quarter, down from 19.1% in the first quarter and 16.8% in the second. Apple’s cut is tied to that money.

Apple’s filings acknowledge that it earns revenue from Google for search placement, but the company has never disclosed how much. The only hard figure comes from the Justice Department’s antitrust case against Google. Court documents, unsealed in 2024 despite both companies’ efforts to keep them private, showed Google paid Apple $20 billion in 2022. Testimony in the same case indicated Apple receives 36% of the search ad revenue Google earns through Safari. Neither company has disclosed a more recent figure.

Apple’s check is very likely still growing; Google’s payments to its partners rose 10% last quarter. What’s at risk is how fast it grows. In estimation, scaling that 2022 figure in line with Google’s search growth since then, the slowdown puts roughly $2.2 billion a year of Apple’s growth at stake compared with Google’s pace earlier this year.

Allies and Enemies

Like some other technology giants, Apple and Alphabet are both allies and enemies, with the two companies competing against each other in several fields and, as shown above, relying on each other in some aspects.

The Alphabet partnership has helped Apple grow its Services revenue and also shows how important its growing iPhone user base has been in recent years.

The Department of Justice fought against the Google and Apple deal recently, but ultimately a judge ruled that it could remain in place.

Alphabet and Apple have also since added to their working relationship with an AI deal announced earlier this year.

Apple announced Google’s Gemini will help power Siri and Apple’s AI Apple Intelligence platform. The deal is worth a reported $1 billion annually.

For Apple and Google moving forward, both companies may win more users who are using products from both companies.

Image via Shutterstock