Why Does Google Pay Apple to Cover the Development Cost of Apple's iOS Platform?

How do you determine when a market participant has made a strategic mistake?  Is it just a difference of opinion?  Where is the proof?  The most direct way is to show you the money.

Part 1. How does the analyst mentioned in this article justify his claim?  Where is his proof?  Notice he is effectively claiming that Google is regularly paying Apple a sum that is more than sufficient to cover the ongoing development cost of Apple’s iOS platform! Why does his $3B estimate even appear conservative for 2017?

Part 2. What does the article convey about the strategic position of Google vs. Apple in mobile? How did Google get itself into this situation? How does Google seek a path out?

Part 3. How does Google (or any other participant) avoid a similar fate in emerging markets like virtual/augmented reality or connected/automated vehicles?

We discuss these and related questions in Device Platforms & Business Models and The Future of the Automotive Transportation Business.