What Happens to Google Revenue as Apple Dumps Google Maps?

Most observers would probably guess that if Apple represents about 40 percent of Google mobile search ad revenue, and Apple stops offering Google Maps in favor of its own map application, that Google revenue will suffer.

But Piper Jaffray's Gene Munster predicts that Apple's decision to abandon Google Maps shouldn't have any "material impact" on the revenue Google gets from iOS.


Munster estimates that Google will generate about $4.5 billion in gross mobile revenue in 2012, the lion's share ($4 billion) from search ads and the rest ($500 million) from display. 


He believes that iOS is likely to remain the biggest or close to the biggest source of that revenue, generating roughly $1.6 billion. Assuming Google keeps half (after subtracting acquisition costs), iOS would generate about two percent of Google's total revenue in 2012.

You might wonder how that could possibly be. Munster assumes Google Maps still will be available in the Apple app store, and that iOS device users will be able to figure out how to keep using it. Munster says Apple represents about two percent of Google's net revenue overall.

Google might hope Munster is right, but is acting as though the loss could be more significant. Google's recent addition of 3D features to Google Maps probably indicates Google's belief that Apple will try and use the 3D feature to differentiate from Google Maps.

Mobile ads associated with maps or locations are estimated to account for about 25 percent of the roughly $2.5 billion spent on mobile ads in 2012, according to Opus Research, up from 10 percent in 2010. That is reason enough for a battle over map applications.

The reason maps get so much advertising is that geo-location is a fairly serious indicator of purchase intent when a retailer is searched for, within a map app. That obviously has implications if you believe location-based advertising and offers are a big business opportunity.