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Booking, which owns Europe's Booking.com and U.S. businesses including Priceline and Kayak, said on Monday that it shelled out $1.3 billion on "performance marketing" in the quarter, up from $1.2 billion a year earlier. That spending was "primarily related to the use of online search engines (primarily Google)," and other online services, according to Booking.
Google is such a critical piece of Booking's advertising budget because so many travelers search for trips with terms like "flight to New York" or "hotel in London." Booking is competing for that highly valued traffic with Expedia, TripAdvisor, Trivago and even Google's own services.
Mark Mahaney, an analyst at RBC Capital Markets, estimates that "north of 80%" of Booking's performance marketing expense goes to Google. That would equal over $1 billion and account for more than 3.6 percent of Google's total third-quarter advertising revenue.
Mahaney, who has a "buy" rating on Booking, said in an email that, "I'm sure they are one of Google's top five direct customers worldwide."
But it's a complicated relationship.
As Booking has continued to bolster its yearly spend with Google, it's increasingly found itself in the position of being both a big customer and a competitor.
For example, Booking is vying for traffic with Google Flights and Google Hotels, which are known as metasearch products, meaning they aggregate data from online travel agencies like Priceline or Expedia, and then direct users to those and other sites to book their trips. A Google search for "flight from San Francisco to Chicago," brings up another Google page that lets the user type in dates and times.
In its most recent quarterly report, Booking mentions Google 52 times and highlights the risk of relying on Google for a "significant portion" of its traffic and bookings.
"Changes by Google in how it presents travel search results, including by placing its own offerings at or near the top of search results, or the manner in which it conducts the auction for placement among search results may be competitively disadvantageous to us and may impact our ability to efficiently generate traffic to our websites," the filing says.
It's an undeniably important market for Google. According to estimates from Skift, travel ad spend accounted for 12 percent of Google's total ad revenue last year.
Google's revenue model is different than Booking's. While OTAs get a cut of bookings made through their site, Google makes money from ads it sells alongside organic search listings as well as within its booking tools. The company also has a newer commission model where it takes a cut of reservations booked through its proprietary travel products .
Another risk that Booking cites is that Google could potentially use its popular Android smartphone software to feature products like its Google Trips app, or by favoring its products in mobile search. On mobile devices, Google has recently given its flight and hotel search services more premium treatment.
Regulators, at least in Europe, are paying close attention to that very issue. Earlier this year, Google was fined $5 billion by the European Commission for how it bundles its apps.
Still, on Booking's earnings call Monday afternoon, CEO Glenn Fogel presented a rosier view.
"We have had a wonderful relationship with the people at Google basically helping build out our business together with them, a very symbiotic relationship, helping improve each other's capabilities," he said. "And we're very pleased with that."
Booking shares rose 4.2 percent to $1,949.46 on Tuesday after the company reported revenue that beat analysts' estimates. The stock is up 12 percent this year.