Apple's Search Engine Deal With Google Expected to Drive Services Revenue Growth Through 2022

[MacRumors]

Morgan Stanley analyst Katy Huberty today raised her services-related revenue forecast for Apple through the 2022 fiscal year.

In a research note shared with MacRumors, Huberty said stronger licensing revenue is the primary driver of the raised estimates, including an acceleration in the search traffic-related payments Apple receives from Google. The New York Times last year reported that Apple receives an estimated $8-12 billion per year in exchange for making Google the default search engine on devices like the iPhone and iPad.

"Following strong March quarter App Store results and an analysis of the key drivers of Apple's Licensing & Other segment, we raise our already above-street FY21 and FY22 Services revenue estimates by 3% and 5% respectively, and are increasingly convinced that consensus Services forecasts over the next 2+ years are too low," wrote Huberty.

Despite the positive outlook on Apple's services, Huberty lowered her 12-month price target for Apple to $155 from $164 per share.

"However, multiple compression over the last 2 months, primarily at Apple's higher growth Services peers, more than offsets our higher revenue and earnings estimates, driving our new sum-of-the-parts based price target to $156, or 33x FY22 EPS, down from $164 previously," wrote Huberty.

Apple's service portfolio includes the App Store, Apple Music, Apple TV+, Apple News+, Apple Fitness+, Apple Arcade, iCloud, and more.

Article Link: Apple's Search Engine Deal With Google Expected to Drive Services Revenue Growth Through 2022

 

[Picklefoot]

Apple needs to stop partnering with Google on anything.

 

[geetfun]

Then AAPL goes and buys back a ton of shares and this thing becomes $180.

 

[lkrupp]

It’s simple to change the default search engine in Safari.

 

[Darrensk8]

Money talks

 

[LeadingHeat]

I still don’t see how the “default” is a problem. Sure, everyone’s grandparents won’t end up switching, but the people who care about their privacy will.

And while it’s a steep price, it’s not like Google is the only one who can get that spot. If bing or DDG outbids them, I’m sure they’d take the default spot. Not nearly anti-competitive.

 

[mannyvel]

"We care about your privacy, but not quite as much as we care about google's cash injector."

 

[Piggie]

Apple "Privacy is our 100% most important focus as a company"

Google "Have a ton of money Apple"

Apple "Ok, that seems to have helped us change our mind in this case"

Amazing really isn't it that Tim Cook can sit there, say what he says whilst keeping a straight face and yet still carries on like this.

 

[Ronald Reagan]

Would definitely prefer to see DuckDuckGo as the default.

 

[sw1tcher]

Despite the positive outlook on Apple's services, Huberty lowered her 12-month price target for Apple to $155 from $164 per share.

"However, multiple compression over the last 2 months, primarily at Apple's higher growth Services peers, more than offsets our higher revenue and earnings estimates, driving our new sum-of-the-parts based price target to $156, or 33x FY22 EPS, down from $164 previously," wrote Huberty.

Is it $155 or $156?

 

[KidAKidB]

Apple needs to stop partnering with Google on anything.

Why? Google's by far the best search engine and Apple wants the best user experience.

 

[KidAKidB]

Apple "Privacy is our 100% most important focus as a company"

Google "Have a ton of money Apple"

Apple "Ok, that seems to have helped us change our mind in this case"

Amazing really isn't it that Tim Cook can sit there, say what he says whilst keeping a straight face and yet still carries on like this.

Apple's privacy stance never had anything to do with them actually caring. It was all because they saw they were falling so far behind in Machine Learning and AI that they changed course and claim to be focusing on Privacy so that they can save face.

 

[sw1tcher]

Would definitely prefer to see DuckDuckGo as the default.

You'll have to manually change it yourself.

With Apple, profit > privacy

 

[honglong1976]

If Apple really cares about privacy, they wouldn't be doing this deal. At the end of the day, it injects a lot of money into Apple, but it is annoying when they go on and on about privacy like they actually care. It's their narrative, their marking and PR! This proves it's nonsense.

 

[I7guy]

Apple "Privacy is our 100% most important focus as a company"

Google "Have a ton of money Apple"

Apple "Ok, that seems to have helped us change our mind in this case"

Amazing really isn't it that Tim Cook can sit there, say what he says whilst keeping a straight face and yet still carries on like this.

Does somehow the internet magically change because google gives apple a dollar?

 

[I7guy]

If Apple really cares about privacy, they wouldn't be doing this deal. At the end of the day, it injects a lot of money into Apple, but it is annoying when they go on and on about privacy like they actually care. It's their narrative, their marking and PR! This proves it's nonsense.

Please explain and be specific how the internet changes by google giving apple one red cent?

To me it shows the value of the Apple platform and if Apple can get the money why not. After all, it's not like Apple has an under the deal table to siphon off it's customers' PII and give them to google.

Additionally, google must find the value in the additional traffic as well. IMO, google being a household brand name at this point, I believe many would pick google over the others.

 

[MacStreamer]

Does somehow the internet magically change because google gives apple a dollar?

I don't have a problem using anything Google, but we have tons of members who love to dump on Google at every turn while blindly defending Apple. Some members are just pointing out the hypocrisy in Apple's righteous privacy sermon by using this deal as an exampe.

 

[adamw]

Take Google's money Apple. Then use Google's own money to build a better Google competitor to release in the future.

 

[now i see it]

While I am guilty of visiting YouTube with a browser (with ads blocked), that's the only service of theirs I'll use. I don't even have a Google search bookmark for my browsers any more. Never use it.
I used to have a Google search bookmark next to my DDG search bookmark but every time I'd be tempted to tap in the Google search, I'd ask myself- do I want to be tracked and profiled for my search?
Answer was always no, so I'd click DDG instead.
In my mind at least, GGL has such a bad reputation for basically being a wiretapper that I can't bring myself to use any of their stuff.
Use an android phone? Thats insane.

 

[mannyvel]

I'm finding that for the most part that ddg and siri's top hit are as good as the goog. Goog has a ton of spammy links now, which for me means it takes a backseat. If i can't find enough with ddg i'll hit goog, but generally if ddg can't find it goog can't either.

 

[I7guy]

I don't have a problem using anything Google, but we have tons of members who love to dump on Google at every turn while blindly defending Apple. Some members are just pointing out the hypocrisy in Apple's righteous privacy sermon by using this deal as an exampe.

I understand the conversation regarding "the supposed hypocrisy of apple". Everyone is entitled to their opinion on the matter. My opinion, is there is no hypocrisy. Apple can criticize google and at the same time accept service fees from them.

It's not like this has changed in the last few years, despite the protestations of the vocal minority.

 

[CarpalMac]

Is this simply to stop Apple developing their own search engine? I mean, it's not like they'd move over to Bing or Ask Jeeves etc...

 

[citysnaps]

Apple "Privacy is our 100% most important focus as a company"

Google "Have a ton of money Apple"

Apple "Ok, that seems to have helped us change our mind in this case"

Amazing really isn't it that Tim Cook can sit there, say what he says whilst keeping a straight face and yet still carries on like this.

What's amazing is the non-stop whining about this. Apparently some really want Duck Duck Go or Bing or <xxx> to be the default search engine. Yeah, that would be a real knee slapper with over-the-top record breaking moans.

Don't like Apple's policies/direction. No worries. Take action. There are loads of other tech companies waiting for the unhappy to reward them with their currency. Easy.

 

[Mr. Dee]

Nothing beats Google, its just gooooood! I do agree, its a privacy risk when it comes to their services, but what isn't these days? You gotta make trade offs sometimes.

 

[99chickens]

Apple "Privacy is our 100% most important focus as a company"

Google "Have a ton of money Apple"

Apple "Ok, that seems to have helped us change our mind in this case"

Amazing really isn't it that Tim Cook can sit there, say what he says whilst keeping a straight face and yet still carries on like this.

How does Apple allowing Google to be a search engine provider violate any of its privacy policies?

It's a rhetorical question. I already know you have zero facts to support your position since Apple's position has never been that apps and services can't collect any information from anyone, and Google's native apps have to comply with the same privacy and security requirements as all other apps.