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Google Rumored to Pay Apple to Aid its Dominance in Search

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Alphabet’s (GOOGL - Free Report) division Google is leaving no stone unturned to bolster footprint further in the search world.

Reportedly, Google is paying a massive $9 billion to Apple (AAPL - Free Report) in order to remain the default search engine in iPhone’s Safari browser.  Notably, Safari is the second largest browser in the world after Google Chrome.

With the growing popularity of iPhone, the latest move is likely to increase traffic on the company’s search platform which bodes well for its dominant position in the global search market.

Coming to the price performance, shares of Alphabet have returned 14.6% on a year-to-date basis against the industry’s decline of 7.4%.



Increasing Payments to Apple

The company’s strong focus toward strengthening its search partnership with Apple will continue to expand Google’s reach in the search space, driven by the loyal iPhone customer base globally.

Google started paying Apple to remain as the default search engine on Safari browser from 2014 when it paid $1 billion which reportedly surged to $3 billion in 2017.

Currently the rumor pegs it at $9 billion which as per the Goldman Sachs analyst might surge to $12 billion in 2019.

Notably, Apple is currently riding on robust iPhone slaes. Total iPhone unit sales came in 41.30 million in the last reported quarter. Further, the iPhone maker quoted a latest survey report from 451 Research, which stated that customer satisfaction was 96% for all iPhone models. Moreover, combining iPhone 8, 8 Plus and iPhone X, customer satisfaction was even higher at 98%.

We believe these growing investments of Google hold potential in the near term as well as in the long haul backed by Apple’s brand loyalty.

Alphabet Inc. Revenue (TTM)

 

Alphabet Inc. Revenue (TTM) | Alphabet Inc. Quote

Strengthening Competitive Position

The above mentioned strong endeavors of the search giant will continue to provide it a competitive edge against Microsoft’s (MSFT - Free Report) search engine, Bing.

The iPhone maker made Bing as the default search engine via its virtual assistant Siri in 2013 but not on its Safari browser.

Nevertheless, Google’s continued focus toward innovation of its search segment which accounts for the major portion of total revenues will aid it in gaining further momentum in the global search market.

Recently, the company has unveiled a number of new features on its search engine that are aimed at enhancing the search results by modifying the feed content and job search result. It will enable direct access to videos related to search topics, providing images with tags and the comfort of selecting language specific to search topics.

Additionally, it rolled out a new search engine called Dataset Search to cater to the needs of the scientific community.

All these will continue to aid its position in this high potential market where there are other players like Baidu (BIDU - Free Report) , Yandex and Yahoo along with Bing.

Moreover, Google’s strategic investments to expand traffic on its search platform will help it to boost market share.

Currently, Alphabet carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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