During testimony in the Department of Justice’s antitrust case against Google, it was revealed that Google pays Apple 36% of the search advertising revenue generated by Google’s search engine, which is the default in Apple’s Safari browser. . This key detail of the lucrative deal between the tech giants had previously been kept confidential, as both Google and Apple did not want it to be made public.
When Google’s senior economist, Kevin Murphy, revealed the 36% figure, those following the case described it as “the biggest blunder of the entire trial.” Google lawyer John Schmidtlein was said to have visibly cringed when the confidential information was shared. Schmidtlein had previously claimed that the data should be kept secret because its disclosure would undermine Google’s competitive position.
For the Department of Justice, this revelation confirms the great value that the default location on iPhones has for search leader Google. The Justice Department maintains that Google pays exorbitant amounts to be established as the default search engine in order to block competitors, lock users into Google services and maintain dominance in search. This deal with Apple is a prime example of how Google uses its vast financial resources to crowd out competitors through deals like this, according to the Department of Justice.
The exact amount of revenue is not yet clear, but is probably in the billions.
While the percentage of revenue sharing is now known, the total dollar amount Google pays Apple is still unclear. Estimates suggest that Apple will likely receive tens of billions of dollars from Google each year for the default search deal. Last year, sources claimed the amount was around $18 billion.
Across Google’s similar default deals with browsers, carriers and device manufacturers, revenue from search advertising is potentially $90 billion a year. Although the details are still unknown, it is clear that the agreement with Apple is very lucrative for both companies. Apple apparently makes billions while giving Google access to millions of potential search users.
The financial terms revealed indicate the extraordinary value Google places on being the default search engine in Safari. Given that Apple took in about $18 billion in 2021, the 36% figure suggests that Google made about $50 billion from Safari searches that year. For Google, no price seems too high to remain the default on Apple products.
Google CEO defends deals as beneficial partnerships
Previously, Google CEO Sundar Pichai testified that predetermined agreements can be valuable if structured properly. He maintained Google’s position that partners like Apple choose Google simply because it offers superior search capabilities. Pichai said mutual benefit and the quality of Google searches were behind partnerships like Apple’s.
However, critics say the newly revealed financial details tell a different story. They suggest that Google is spending billions not necessarily to offer the best search, but to exclude its competitors through deals that make it extremely difficult for rivals to gain search share. Google’s willingness to pay Apple so much reinforces the idea that Google highly values these deals for anti-competitive reasons.
If the Justice Department proves that the agreements illegally maintain Google’s monopoly in the general search markets, the company could be forced to modify agreements like the one with Apple. While the trial continues, Google benefits from the current agreements. But the future financial implications for Google and Apple could be significant if the case affects the agreements.
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Categories: Technology
Source: vtt.edu.vn