Google is one of the most well-known companies in the world, but even so, the search giant still pays a nice chunk of cash each year to maximize profits and visibility as much as possible. Money that Google pays to have Google-served ads on websites, the default search engine on iOS, and Google apps preinstalled on Android phones is referred to as "traffic acquisition costs", and the company pays $19 billion each year for it.
That's no small amount of money by any means, and it's steadily growing for Google's total Internet properties. Money spent on traffic acquisition costs was around seven-percent in 2012, but now in 2017, it's reaching up to eleven-percent.
These costs naturally go up as Google's traffic increases, and when looking at mobile-centric partners, Google has already paid $7.2 billion in the past year (three times more compared to what it paid in 2012) to ensure that its name is consistently represented across smartphones, tablets, etc.
What exactly does that $7.2 billion go towards? Owners of virtually any Android phone know that the Google search bar is typically set at the top of the home screen by default and that an assortment of Google's many first-party apps are preinstalled out of the box, including the likes of YouTube, Photos, Duo, etc. These are things that come as a result of those fees paid by Google, and it helps to keep the company's search platform and many services in front of users eyes from day one.
A lot of money goes into crafting what you see on your phone as soon as you take it out of the box.
When a company like Samsung or LG wants to add the Play Store onto their Android devices, they have to voluntarily agree to install other Google apps on their phones in order to do so. This is how things have been for years now, but antitrust authorities in Europe are currently investigating to determine whether or not Google is abusing the power it has over these companies with its ownership of Android.
It'll more than likely take years before a final verdict is reached on this matter, but even before it does, this has the chance to further increase fees that Google pays to have its search bar on home screens and have so many of its apps preinstalled from day one.
These rising costs don't' seem all that surprising as Google continues to increase in popularity and size, but in any case, it's still interesting to better understand just how your smartphone came to be. You might not have thought too much about what apps were installed on your Galaxy S8 or LG G6 when you powered it on for the first time, but Google paid billions of dollars to ensure that certain elements were in place upon turning that screen on.
Just some nice food for thought for your Tuesday morning.
Google is spending $1.1 billion to hire HTC's best smartphone talent
