These Google traffic fees are the result of contractual arrangements parent company Alphabet Inc. makes to ensure its dominance. The company pays Apple to make Google the built-in option for web searches on Apple’s Safari browsers for Mac computers, iPhones and other places. Google also pays companies that make Android smartphones and the phone companies that sell those phones to make sure its search box is front and center and to ensure its apps such as YouTube and Chrome are included in smartphones.
In the last year, Google has paid these partners $7.2 billion, more than three times the comparable cost in 2012. Details of these financial arrangements are secret, but analysts think that the biggest culprit in the recent cost uptick is a revised agreement Google struck with Apple a couple of years ago. Analysts think this contract costs Google $3 billion to $4 billion a year, or perhaps much more. Lately some Google watchers have said investors shouldn’t panic about the traffic fees. Baird recently estimated the growth rate of traffic acquisition costs is likely to ease off this year or in early 2018, in part because Google is past the worst of the cost increases from its revised Apple contract.