The United States antitrust trial involving Google has brought to light a crucial aspect of its partnership with Apple. It has been disclosed that Google has been compensating Apple with a notable 36 percent of search ad revenue generated from the Safari browser. This information surfaced during the testimony of University of Chicago professor Kevin Murphy, who was speaking on behalf of Google's defense. Previous testimonies in the trial have shown Google's multi-billion-dollar payments to Apple to keep its search engine on Safari.
Legal Battle Background
Engagements between tech giants and their business arrangements have been under the legal microscope since the United States Department of Justice initiated legal proceedings against Google in 2020 for alleged monopolistic practices. Central to the complaint is the agreement that sets Google as the default and, essentially, the sole search engine on Apple's prominent Safari browser and other Apple search tools. This longstanding deal was originally forged in 2002 and has continued unbroken, adapting to the launch of new Apple devices like the iPhone and iPad, introduced in 2007 and 2010, respectively.
Reaction and Response
In the wake of this revelation, it was noted by Bloomberg that Google's lawyer, John Schmidtlein, showed an apparent reaction, indicative of Google's preference for confidentiality on this matter. The company even tried to conduct the trial without public or media presence. The Justice Department is leveraging the exposed terms of this agreement as solid evidence to assert that Google is unlawfully upholding its dominance in search engine and search advertising markets.
As the trial, which commenced in September 2023, continues, the scrutiny of these behind-the-scenes financial workings between Google and Apple may set a precedent for the treatment of similar arrangements across the tech industry in antitrust considerations. Presently, Apple has refrained from issuing any statement regarding the developments. Similarly, Google has chosen not to comment on the details that have emerged from the trial.
Microsoft's Position During the Trial
One of the topics of the trial has been Microsoft's Bing. More specifically, whether Google has stifled the growth of the rival search engine or whether Microsoft's own failings have stopped Bing matching Google. In his testimonies to the court, Microsoft CEO Satya Nadella suggested the former.
Nadella unveiled that Microsoft has poured a staggering $100 billion into Bing, its proprietary search engine. Nadella candidly admitted Microsoft's unsuccessful attempts to dethrone Google from this position, even after offering Apple more favorable terms. He speculated that Apple might have used Microsoft's interest as leverage to extract higher bids from Google. This strategic alliance between Apple and Google, Nadella argued, is pivotal for gathering data, improving search services, and attracting advertisers.
However, Google countered by saying Microsoft's own failings are behind Bing's slow growth. The company's lawyers were critical of Bing, suggesting that Microsoft's failures to invest and innovate have rendered Bing unpopular. He also mentioned an instance when Firefox browsers had Bing set as the default search engine, which reportedly led many users to revert to Google Search.