November Paul’s Chief Executive Officer Fisher Tim Cook is speaking at the 2019 Dreamforce Convention in San Francisco on November 19, 2019.
David Paul Morris | Bloomberg | Getty Images
The Justice Department’s anti-trust lawsuit against Google focuses on deals signed on mobile devices and web browsers as the default search engine.
The largest of these default search deals is with Apple Pal.
Through its placement as the default search engine in the Safari browser for the iPhone and iPad, Google As a result, Apple devices accounted for half of Google search traffic in 2019, covering 36% of search queries.
Google pays Apple the best for that placement. Citing “public estimates”, the DOJ said that Google pays Apple Paul તરીકે 8 billion to 12 12 billion a year as the default default search engine on Apple products.
Apple Pal holds a stake in Google Payments as part of its services business, with sales of 46 46.2 billion in fiscal year 2019, accounting for 17.7% of the company’s total revenue.
Apple executives have been paying close attention to the business in recent years, with Tim Cook promising to double its revenue in 2017 to 2020. (Apple Paul fulfills that promise). Apple’s services services have contributed to the company’s growing value, which has surpassed 2 2 trillion this year, as it looks like an iPhone software company to a software software company, which is usually more productive than hardware manufacturers.
When Apple Pull discusses its services business, it focuses on subscriptions that it sells directly to customers like Apple Pull Music, Apple Pull TV +, iCloud Storage and its upcoming Apple Pull One bundles that will wrap them up at a discount.
But the DOJ lawsuit highlights that “services” are a catch-line l-line item.
Revenue from services includes sales of iTunes and Apple Paul’s streaming services, but also revenue from in-app purchases on the App Store, Apple Pulker warranty and licensing – including Google’s Traffic Acquisition (TAC) payments – according to Apple Paul’s annual filing.
Assuming DOJ’s assessment of Google’s payments is accurate, it is between 17% and 26% of Apple Paul’s revenue.
In other words, a huge component of the business that represents the future of Apple Moment is payments from a single partner, Google.
Investors will likely take a look at the Apple Apple Pal services story in light of regulatory pressure on both Apple’s licensing business with Google and congressional hearings on App Store practices and lawsuits with Epic Games.
“We do not view the quality or sustainability of Apple’s services as much as other companies that have sole business services,” Rod Hole, an analyst at Goldman Sachs, wrote last month. “For example, we speculate that Google TAC payments have contributed more to overall services and services growth than many investors appreciate.”
Now, some analysts are concerned that the focus of distrust on Google could change Apple Apple’s services to make the business look less profitable, which could mean lower value for Apple Paul stock.
Bank analyst Wasmi Mohan, an analyst at Bank of America, wrote in a note this week that any change in the rev share agreement could eventually lead to a potential rev / margin headwind on services, resulting in multiple valuation agreements.
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