Apple’s Hidden Google Problem Could Cost It Billions

Key takeaways

• Apple’s earnings from Google search ads are likely to grow slower, potentially costing the company about $2.2 billion in annual growth, but a new AI partnership may help mitigate the impact.
• Google search revenue grew 12% in Q3 2024
• Apple receives 36% of Google’s search ad revenue
• Google paid Apple $20 billion in 2022

What happened

Apple’s revenue from Google’s search ads is shrinking because Google’s search revenue growth has slowed, cutting the amount Apple earns from the partnership. In 2022 Google paid Apple $20 billion for search placement, and Apple receives about 36 % of Google’s search ad revenue. Google’s search revenue grew 12 % in Q3 2024, down from 19.1 % in Q1 and 16.8 % in Q2. The slowdown could mean roughly $2.2 billion less annual growth for Apple compared to earlier Google growth rates. Apple and Google…

Why it matters

Apple’s Services revenue, which includes search fees, is a growing part of its business. A $2.2 billion hit to annual growth could weigh on Apple’s earnings outlook and investor sentiment. The partnership also signals how intertwined the two tech giants are, affecting competitive dynamics and future collaboration…

Short-term and longer-term

Short-term. Over the next few weeks, watch for Apple’s Q4 earnings and any

Longer-term. For the next several months, investors should assess whether Apple’s Services revenue can compensate for the projected $2.2 billion shortfall from search ads.