The Partners Google Pays InsteadNarrow moat

Alphabet's largest counterparties by dollar value are not the ones who pay it. Traffic acquisition costs — the payments made to distribution partners like Apple and to the Google Network publishers who carry its ads — came to $59.9 billion in 2025¹. That is money moving out of the company to secure the position from which the advertising revenue is collected.

The economics are sound and slightly uncomfortable. Paying roughly $20 billion a year for iPhone default placement² is excellent business if it protects a search franchise worth many times that — the return is obvious, and Alphabet has never seriously considered stopping. But it means a material share of the profit generated by the search monopoly is paid away each year to the companies that control access to users, and those companies know exactly what the placement is worth.

The Google Network side of the same line is moving the other way: revenue from ads placed on third-party publisher sites has been shrinking as advertising consolidates onto owned platforms, which reduces both the revenue and the associated payments. Watch the TAC rate — payments as a share of the advertising revenue they generate — because that ratio is the clearest measure of how much of Alphabet's monopoly rent actually stays with Alphabet. And watch the antitrust remedies, which could end the largest payment involuntarily.