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If you're an iOS user, you may think which web browser you choose is of little consequence. But for Apple (NASDAQ: AAPL ) and Google (NASDAQ: GOOGL ) , the difference between whether your finger taps the blue compass or the multicolored circle icon can eventually equate to big money.
Pay to play
Google pays a traffic acquisition cost (or TAC) to Apple each year to make its search engine the primary search tool in iOS -- and that cost is estimated to be more than $1 billion in 2014. That steep price has made Google intent on wooing iOS users to its Chrome browser. If Google can get iOS users to switch from Safari to Chrome, the company could save a tremendous amount in these TAC costs.
Think of it this way: If Google could shave off $300 million from the $1 billion it'll pay to Apple in 2014, the company would save about as much as Motorola's quarterly operating losses.
But it has to get users to switch first.
From March to June of this year, Chrome's growth on iOS went from 10.9% to 14.3% for active users. That's a trend the company hopes will continue and it's implementing new updates to ensure that it does. In July, Google updated the iOS Chrome app to include new features like wireless printing, and one really important new feature -- data compression. Google said the update will speed up webpage loading and decrease data usage.
App features alone probably won't convince Safari users to switch, though, so that's why Google recently released APIs for app developers that open Chrome when users follow a link. If you're an iOS user, you've probably noticed that clicking on a link in the Gmail app opens Chrome rather than Safari, if Chrome is installed, of course. Google uses the same idea for other apps by giving users the option to open a link in Chrome rather than Safari. This will likely help Google make some additional gains against Safari, but it's yet to be seen whether it will save Google in future traffic acquisition costs.
More than a click away
Though Chrome is making gains on the iOS platform, some of that may change once Apple's new iOS debuts next week, which will come with a redesigned and faster Safari. For the immediate future, it seems Google will still have to shell over those traffic acquisition costs, but investors should keep an eye on any changes in Chrome's share of iOS browsing. Google isn'y likely to give up its efforts to dominate every part of mobile it can and you can be sure Apple will do everything it can to keep Safari as the top iOS browser.
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