Google shares more than a third of its revenue generated via the Safari browser with Apple as part of a deal that makes Google the default search engine on the browser.
Since 2002, both Google and Apple have maintained an agreement according to which Google is set as the default search engine on Apple’s Safari. The exact details of the revenue-sharing agreement have largely remained confidential. On Monday, Kevin Murphy, a University of Chicago professor and the main economics expert at Google owner Alphabet Inc., spilled the secret.
He claimed that Google pays Apple 36 percent of the revenue it makes through search advertising via Safari, according to Bloomberg. The revelation was made while Mr. Murphy was testifying in Google’s defense at an antitrust trial in Washington.
The revenue-sharing information was supposed to remain confidential, and Mr. Murphy was not expected to reveal it in court. The incidental disclosure reportedly made Google’s main litigator, John Schmidtlein, “visibly cringed,” per the outlet.
The antitrust case has been filed by the U.S. Department of Justice (DOJ). Both Google and Apple have strongly objected to revealing details of the revenue-sharing agreement.
“Allowing competitors access to the particular provisions that Google and Apple have negotiated in a confidential commercial agreement would give those competitors a one-sided advantage in renegotiating their own confidential agreements with Apple.”
The deal is one of Google’s most important agreements as it allows the company’s search engine to be set as default on the iPhone, the most widely used smartphone in the United States. According to data from Statista, 48.7 percent of smartphone users in the country used an Apple iPhone in 2022.
Antitrust Case
The antitrust lawsuit was filed by the justice department and 11 states in 2020, alleging that Google unlawfully maintains “monopolies in the markets for general search services, search advertising, and general search text advertising in the United States through anticompetitive and exclusionary practices.”For a general search engine, the most effective means to garner users is to “be the preset default general search engine for mobile and computer search access points,” the lawsuit notes.
Google pays billions of dollars annually to (a) device manufacturers like Apple, LG, Samsung, and Motorola; (b) U.S. wireless carriers like AT&T, T-Mobile, and Verizon; and (c) browser developers such as Mozilla, Opera, and UCWeb to secure the status of the default search engine, it said.
In many cases, such contracts are made “to specifically prohibit Google’s counterparties from dealing with Google’s competitors.”
“Between its exclusionary contracts and owned-and-operated properties, Google effectively owns or controls search distribution channels accounting for roughly 80 percent of the general search queries in the United States,” said the lawsuit.
“Largely as a result of Google’s exclusionary agreements and anticompetitive conduct, Google in recent years has accounted for nearly 90 percent of all general-search-engine queries in the United States, and almost 95 percent of queries on mobile devices.”
The lawsuit pointed out that Google’s “anticompetitive practices are especially pernicious” as it prevents rivals from scaling to compete with the search engine giant while also thwarting innovation.
The complaint cited a case of a search engine firm that offered subscription-based service rather than relying on ad revenues. However, Google’s control of search access points meant that such innovations were “denied the tools to become true rivals.”
Due to Google’s actions, “countless advertisers must pay a toll to Google’s search advertising and general search text advertising monopolies; American consumers are forced to accept Google’s policies, privacy practices, and use of personal data; and new companies with innovative business models cannot emerge from Google’s long shadow,” the lawsuit stated.
“For the sake of American consumers, advertisers, and all companies now reliant on the internet economy, the time has come to stop Google’s anticompetitive conduct and restore competition.”
In testimony last month related to the case, Microsoft CEO Satya Nadella asserted that companies competing against Google in the search engine field had a massive disadvantage due to the deals struck by Google.
“Everybody talks about the open web, but there is really the Google web,” Mr. Nadella said, according to CNBC.
The Microsoft CEO stated that he has “focused every year of my tenure as CEO to see if Apple would be open” to accepting a deal with them to make its search engine Bing default on Apple devices. However, such talks fizzled out.
The argument that people have a choice to switch their default search engine is “complete bogus,” he said, adding that making such changes on mobile platforms is a difficult process as “they’re all locked up.”
The Epoch Times reached out to Google for comment.
