Google: The Rival That Pays RentNarrow moat

Apple (AAPL) — moat facet

Apple takes about twenty billion dollars a year from Google and pays about one back for Siri's brain — and the court let the payments run on, minus exclusivity.

No relationship in technology is as productively contradictory as Apple's with Google. Android runs on the great majority of the world's smartphones and is the only credible alternative to iOS — and Google pays Apple roughly $20 billion a year to be the default search engine on the devices running that alternative1. It is close to pure margin, one of the largest single contributors to Apple's Services profit, and a federal court has ruled the arrangement that produces it anticompetitive.

Alphabet traffic-acquisition costs ($B)$54.9B2024 TAC$59.9B2025 TAC~$20BPaid to Apple, 2022Alphabet Form 10-K FY2025; ~$20B from US v. Google trial evidence
Apple's payment comes out of a pool Alphabet grew to $59.9 billion in 2025, and the court let it continue on non-exclusive terms.

In January 2026 the entanglement deepened: Apple contracted with Google to have Gemini models power the rebuilt Siri, reportedly around a billion dollars a year for a custom model running inside Apple's own Private Cloud Compute2. So Apple now takes twenty billion dollars from Google with one hand and pays roughly one billion back with the other, while competing with it in phones, browsers, maps, video and advertising.

The logic on both sides is sound and slightly uncomfortable. Google buys the world's most valuable audience — affluent iPhone owners — because losing them to a rival default would cost far more than the fee. Apple sells a preference it would probably have expressed anyway, since Google genuinely is the best search engine, and books the proceeds as high-margin Services revenue. The court has now drawn the lines: the remedies ruling of September 2025 let default payments continue but banned exclusive deals3, the six-year final judgment followed in December, and Google appealed in January 20264. Those payments come out of a pool Alphabet grew to $59.9 billion of traffic-acquisition costs in 20255. Watch whether non-exclusive terms lower the price of the default, and whether Apple's own foundation models ever replace Gemini in Siri. A rival that pays you is a wonderful arrangement — right up to the day a judge or a boardroom decides it should stop.

Moat trajectory: Holding steady

The legal cloud has partly lifted. The remedies ruling let Google keep paying for default placement but banned exclusivity, the six-year judgment is under appeal, and Apple rents Google's Gemini for Siri. The payment is no longer in danger of being banned; the risk now is that non-exclusive terms slowly lower its price.

The number that tests this moat
Reported
Alphabet traffic-acquisition costs
$59,926M in 2025, from $54,900M in 2024

Apple's payment is the largest single piece of what Alphabet pays for traffic. The remedies let payments continue on non-exclusive terms; a fall in TAC while search revenue grows would mean the price of the default is coming down.

Source: Alphabet Form 10-K, FY2025 ↗
References
  1. ReportedGoogle pays Apple roughly $20 billion a year for default search placement, an arrangement the court found anticompetitive in August 2024.
    United States v. Google LLC (D.D.C., Judge Mehta) — DOJ case page: Aug 2024 liability ruling (default-search payments, about $20B a year largely to Apple, found to be unlawful monopoly maintenance); final judgment and memorandum opinion Dec 5, 2025; the United States' response and opening brief on cross-appeal, July 28, 2026 — Liability ruling Aug 2024; final judgment Dec 5, 2025; appeals 2026 · publ. 2024–2026 · source ↗
  2. ReportedFrom January 2026 Gemini powers the rebuilt Siri, at a reported ~$1B a year, running inside Apple's Private Cloud Compute.
    Apple–Google partnership announcement (Jan 12, 2026) — Gemini models to power the rebuilt Siri; reported ~$1B/yr; custom ~1.2T-parameter model served from Apple's Private Cloud Compute; first features iOS 26.4 (spring 2026), full rollout with iOS 27 (fall 2026) — Announced Jan 2026 · publ. Jan 12, 2026 · source ↗
  3. ReportedThe September 2025 remedies ruling let default payments continue but banned exclusive search-distribution deals.
    Hughes Hubbard, 'Court Issues Remedies Ruling in United States v. Google Search Case' (Sept 3, 2025) — Judge Mehta's 230-page remedies ruling: no forced divestiture of Chrome or Android ('the complete divestiture of Chrome is a poor fit for this case'); payments for default placement not banned but exclusive search distribution deals prohibited; search index and user-interaction data (not ads data) to be shared with qualified competitors at marginal cost — Remedies ruling of September 2, 2025 · publ. September 3, 2025 · source ↗
  4. ReportedFinal judgment was entered in December 2025 and Google appealed in January 2026.
    PPC Land, 'Google files appeal challenging six-year search remedies' — Judge Mehta entered final judgment on December 5, 2025, imposing six-year behavioural remedies (data sharing, syndication, Technical Committee oversight); Google filed its notice of appeal on January 16, 2026 — December 2025 - January 2026 · publ. January 2026 · source ↗
  5. ReportedAlphabet's traffic-acquisition costs were $59.9 billion in 2025.
    Alphabet Form 10-K, FY2025 — cost of revenues table: TAC $54,900 million (2024) and $59,926 million (2025), TAC rate down from 20.7% to 20.3%; cash flow statement: purchases of property and equipment $32,251m (2023), $52,535m (2024) and $91,447m (2025); Google Network revenues $30,359m (2024) and $29,792m (2025) — FY2025 (year ended December 31, 2025) · publ. February 5, 2026 · source ↗
Sources
Generated September 19, 2026