As Google faces an antitrust lawsuit from the U.S. Department of Justice, details about its search engine agreements with Apple have emerged.
The spotlight falls on the substantial revenue Google pays Apple to maintain its position as the default search engine on Safari browsers across iPhones, iPads, and Macs. This confidential information, disclosed during Google’s defense in the ongoing antitrust trial, offers a rare glimpse into the intricate workings of these tech giants’ business arrangements.
Apple’s reliance on Google search advertising revealed in antitrust trial
According to testimony by Kevin Murphy, an economics expert testifying on Apple’s behalf, Google pays Apple a staggering 36% of the total revenue generated from search advertising through the Safari browser. This substantial percentage, initially intended to remain confidential, visibly unsettled Google’s main lawyer, highlighting the sensitivity of the disclosure.
This financial arrangement forms part of a long-standing agreement between Google and Apple dating back to 2002. Despite revisions over the years, it has cemented Google’s position as the default search engine on Apple devices, including iPhones, iPads, MacBooks, and older Mac systems.
The revenue share, estimated to be between $18 billion and $20 billion annually, represents a significant portion of Apple’s total annual operating profits, according to wealth management company Bernstein. This mutually beneficial deal dictates the default search engine for the widely used iPhone, playing a pivotal role in Google’s search engine dominance.
The U.S. Department of Justice’s antitrust lawsuit targets Google’s deal with Apple, alleging that it maintains an illegal search engine monopoly. Microsoft CEO Satya Nadella supports this claim, stating that the agreement makes it nearly impossible for other search engines, like Bing, to compete effectively.
If Google loses the antitrust lawsuit, the deal with Apple could be terminated. Therefore, the Cupertino tech giant might be compelled to provide users with the option to choose their preferred search engine when setting up a device, potentially ending Google’s default status.
Future possibilities
The revelations raise questions about Apple’s future actions. Losing out on billions from Google could incentivize Apple to develop its own search engine. Apple’s AI chief, John Giannandrea, leads a search team within the company that has already developed a next-generation search engine for Apple apps, laying the groundwork for a potential Google Search alternative.
This ongoing antitrust trial and the emerging details of Google’s search deals with Apple highlight the complex dynamics and financial implications within the tech industry. As the landscape evolves, it remains to be seen whether these revelations will lead to significant changes in the search engine market and the dominance of Google.
(via Bloomberg)
