Goldman warns that Apple is too dependent on Google for services revenue, and will need to roll out a ‘Prime’ bundle

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  • Goldman Sachs estimates Google paid Apple nearly $9.5 billion in traffic acquisition costs (TAC) during calendar year 2018.
  • The fees will continue to make up a large portion of Apple’s services revenue into 2019, the firm said, but will grow at slower rates.
  • Apple could need to make up the difference with a ‘Prime’ bundle.

Analysts at Goldman Sachs estimate more than 20 percent of Apple’s burgeoning services revenue comes from Google.

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Apple touts its services revenue as the next growth driver for the company, amid slowing iPhone sales. But the share of the segment that comes from Google is decelerating, and Apple could need to make up the difference with a ‘Prime’ bundle, Goldman Sachs said in a note published Monday.

“Apple will need to add mid to high single digits growth back to Services revenues through successful launch of the ‘Apple Prime’ bundle including original video that we expect to be rolled out this Spring/Summer,” the firm said.

Google pays device makers like Apple traffic acquisition costs to be the default search engine. That revenue gets lumped into Apple’s burgeoning services segment, which also includes App Store, iCloud and Apple Music revenue.

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