ALPHABET paid Apple US$20 billion in 2022 for Google to be the default search engine in the Safari browser, according to newly unsealed court documents in the Justice Department’s antitrust lawsuit against Google.
The deal between the two tech giants is at the heart of the landmark case, in which antitrust enforcers allege Google has illegally monopolised the market for online search and related advertising. The Justice Department and Google will offer closing arguments in the case on Thursday (May 2) and Friday, with a decision expected later this year.
Google and Apple had hoped to shield the payment amount from public disclosure. At the trial last fall, Apple executives testified that Google paid “billions”, without specifying a number. A Google witness later accidentally disclosed that Google pays 36 per cent of the revenue it earns from search ads to Apple.
Court documents filed late Tuesday ahead of the closing arguments mark the first public confirmation of the figures by Apple’s senior vice-president of services, Eddy Cue. Such numbers are not disclosed by either company in their securities filings. The documents also revealed the importance of the payments to Apple’s bottom line. For instance, in 2020, Google’s payments to Apple constituted 17.5 per cent of the iPhone maker’s operating income.
The agreement with Apple is the most important of Google’s default deals, since it sets the search engine for the most used smartphone in the US.
Apple first agreed to use Google in the Safari browser in 2002 for free. But the companies later decided to share revenue made from search advertising. By May 2021, that translated to Google paying Apple more than US$1 billion a month for its default status, prosecutors said in the filing.
GET BT IN YOUR INBOX DAILY
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Microsoft, which operates the competing search engine Bing, has repeatedly tried to entice Apple away from its relationship with Google. The company offered to share 90 per cent of its advertising revenue with Apple to make Bing the default in Safari, according to the court documents. Those figures also were not previously disclosed.
Microsoft chief executive officer Satya Nadella testified at the trial last year that the company was willing to make a number of concessions, including hiding the Bing brand, to persuade Apple to make the switch, which he said would be “game-changing”.
“Whomever they choose, they king-make,” Nadella said of Apple. BLOOMBERG
